Back to top

America Movil to Merge Operations

Read MoreHide Full Article

In an attempt to consolidate business, America Movil (AMX - Free Report) is planning to merge its Brazilian wireless operations that comprise fixed phone business, wireless and cable services. We believe that the combined operations of all these businesses will provide significant cost benefits to the company and strengthen its market position in a competitive business environment.

In Brazil, America Movil controls a significant market share through its three subsidiaries Embratel Participacoes SA, Claro and Net Servicos de Comunicacao SA. While Embratel is a fixed phone company, Claro and Net Servicos incorporate the wireless and cable business, respectively.

In Brazil, America Movil’s business operations have been facing stiff competition alongside regulatory issues. These have dampened the company’s performance in the recent past.

The company’s Brazilian wireless operation, Claro remains challenged by Vivo, a unit of Telefonica (TEF - Free Report) , which is the leading wireless operator in Brazil. Additionally, competition has intensified as Telemar Norte Leste, another major telecom company launched its mobile services in Sao Paulo, Brazil’s largest and most lucrative market. Moreover, Oi’s parent company Telemar Participacoes has acquired a controlling stake (61.2%) in Brasil Telecom, providing the joint entity with a nationwide footprint for wireless.

Despite facing these challenges, we believe America Movil continues to dominate the Latin American telecom market with other large players like Grupo Televisa S.A.  (TV - Free Report) and NII Holdings Inc. . It remains focused on expanding its network capabilities as it aggressively invests in developing cellular networks in the geographical zone. America Movil also focuses on building new generation broadband networks, both in the fixed and mobile platforms. This will require an investment of approximately $8 billion over the next three years, as it will require the expansion of data networks.

America Movil has a Zacks Rank #3, implying a Hold rating.

In-Depth Zacks Research for the Tickers Above

Normally $25 each - click below to receive one report FREE:

Telefonica SA (TEF) - free report >>

Grupo Televisa S.A. (TV) - free report >>

America Movil, S.A.B. de C.V. (AMX) - free report >>

More from Zacks Analyst Blog

You May Like