Back to top

Image: Bigstock

Televisa Aims to Dethrone America Movil's Mexico Supremacy

Read MoreHide Full Article

Amid intense battle for survival in Mexico’s telecommunication market, America Movil, S.A.B. de C.V. (AMX - Free Report) recently hit the headlines when its arch-rival — Grupo Televisa, S.A.B. (TV - Free Report) — decided to enter the space as a mobile virtual network operator (MVNO) under the brand name, Izzi. Reportedly, Televisa aims to tap into increasing demand for low-priced phone packages, especially in light of the adverse economic impact of the COVID-19 pandemic. It is estimated that the latest move by Televisa is likely to pose a serious threat to the Latin tech giant and dethrone Carlos Slim’s dominating position in Mexico’s mobile communications market.

Notably, Televisa’s Izzi has been the most significant producer of Spanish contents in the world. Markedly, the company is a triple play operator that offers best-in-class broadband, pay TV and telephone services to customers. Given the fact that Mexico has a relatively low level of broadband penetration, Izzi’s fiber-based broadband strategy and innovative on-demand content with attractive offers has been able to grab the attention of a large scale of audience, thereby boosting healthy competition in the telecommunications market.

Leveraging economies of scale, the broadcaster giant will initially sell Internet packages to its existing customers at 250 pesos/month, which is nearly 80% cheaper than America Movil’s Internet plans. Reportedly, Televisa will rent space on Mexico’s wholesale telco network — Red Compartida — to promote and distribute its MVNO offerings to customers. Operated by Altan Redes, the wholesale network has been established in collaboration with the Mexico government. Notably, the latest MVNO offering, which is expected to threaten America Movil’s market share will cater to nearly three million households in 17 Mexican cities. Impressively, Televisa’s telecom unit generated 70% of net sales in the first quarter of 2020.

However, critics argue that it is very difficult to loosen Slim’s monopolistic approach due to his long-time presence in the Mexican telco space. To add to that, America Movil’s mobile arm, Telcel, which is an undisputed leader in the Mexican wireless market, holds nearly two-third of mobile connections in the country. Reportedly, the Mexican government had passed a constitutional reform in 2013 to erode America Movil’s dominant position but even tech giants like AT&T Inc. (T - Free Report) and Telefónica, S.A. (TEF - Free Report) have failed to significantly challenge the leader. It also offers enhanced communications solutions with higher data speed transmissions at lower prices. It is to be seen whether the broadcaster giant can actually turn the tables by encouraging real competition in the upcoming days.

Notably, America Movil is Mexico’s prime mobile network operator with an enormous portfolio of international subscribers across 25 countries. However, it follows an aggressive promotional strategy to increase its penetration in the smartphone market. With a steady increase in subscriber base, America Movil has strengthened its position in core markets. It is one of the leading providers of integrated telecommunications services in Latin America and the Caribbean. The company aims to grow in other parts of the world by continuing to expand subscriber base through the development of existing businesses and strategic acquisitions. Also, the company is focused on its cost-cutting program, particularly in Latin America, which is expected to reduce its total operating expenses.

America Movil has long-term earnings growth expectation of 14.8%. The Zacks Rank #4 (Sell) stock has declined 4.2% compared with industry’s decline of 17.2% in the past year. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.



5 Stocks to Soar Past the Pandemic

In addition to the companies you learned about above, we invite you to learn about 5 cutting-edge stocks that could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of the decade.

See the 5 high-tech stocks now>>

Published in