Image credits: Alina Grubnyak
News Article

America Movil: 5G, TracFone, Underperformance

By Cinthya Alaniz Salazar | Mon, 10/25/2021 - 15:51

Mexican telecommunications giant America Movil is ready to launch its 5G network and looks to finalize the sale of its US subsidiary TracFone but cites continued supply chain disruptions for its underperforming 3Q2021 results.

After a year-long delay, America Movil contends its ready to launch its long awaited fifth generation technology in Mexico and Latin America. However, the company failed to provide an official launch date, proclaiming its waiting on the final confirmation on spectrum assignment, which varies in the 25 countries where it currently operates. 

“We’re doing everything to be ready for 5G. We still do not know exactly when we are going to launch 5G, but we’re ready to launch it,” CEO Daniel Hajj told investors in a company’s earnings call. 

Moreover, before the end of the year the Mexican telecommunications company anticipates it will conclude the sale of its prepaid mobile phone subsidiary TracFone to Verizon for US$6.25 billion. This follows the conclusion of an FCC investigation initiated by the attorney generals of 16 US states and the District of Columbia, which were concerned the deal would raise prices or impact the government’s ability to continue supporting Lifeline, a US subsidy program that provides telecommunication services to 1.7 million low-income subscribers.

“Verizon would have significant incentives and opportunities to push subscribers from Lifeline and inexpensive prepaid services to higher revenue plans,” said Senators Richard Blumenthal, Sheldon Whitehouse, Dianne Feinstein, Ron Wyden and Ed Markey said in a letter. Ultimately, however, the FCC found that the subsidy program would not be affected.

Finally, after America Movil reported a 16.2 percent decline in year-to-year sales, which the company attributed to a lack of components and semiconductors. The company’s stock values fell by 0.38 percent after the announcement.

“We’re suffering a bit from lack of handsets right now,” Hajj said. “Overall, in all the world, in all Latin America, and that includes Mexico and Brazil, there’s a lack of handsets.” 

Nevertheless, market analysists expect sales to pickup with seasonal promotional shopping, especially with Christmas bonuses around the corner.

“In the last quarter of the year, the consumer is incentivized by end-of-year festivities and seasonal promotions that arise, contrary to what happens in more modest markets,” said Benjamin Alvarez, stock market analyst at CI Banco.  

The data used in this article was sourced from:  
America Movil, CPI, BMV
Photo by:   Alina Grubnyak
Cinthya Alaniz Salazar Cinthya Alaniz Salazar Journalist & Industry Analyst