América Móvil Surpasses 200 mil. Subscribers at End-2009

Despite the difficult economic environment, consolidated operating revenues for the 12 months ending 31 December 2009 increased 14.2% year-on-year (y/y) to 394.7 billion Mexican pesos (US$30.4 billion). América Móvil reached 204.8 million customers at the end of the year, 9.8% more than in 2008. This increase was mainly supported by strong expansion in the total number of wireless assesses, which resulted in 201 million customers at end-December 2009, up 10% y/y—the expansion confirms once more its position as the third largest wireless operator in the world in terms of equity subscribers. The major increases came from Brazil, with 5.7 million new subscribers, followed by the United States and Mexico, with 3.2 million and 2.8 million, respectively. Data revenues also saw important growth thanks to the rapid expansion of 3G services in Brazil, Argentina, and Chile. Operating income (earnings before interest and taxes) for 2009 increased 9.5% y/y to 105.8 billion Mexican pesos. Net income for the period amounted to 70.5 billion Mexican pesos, up 18.5% y/y.

Outlook and Implications

• Moving Forward: After having added 18 million new wireless customers in 2009, América Móvil expects to add some 13 million during 2010. In fact the operator is keeping a close eye on the spectrum auctions in the firm's two biggest markets, Mexico and Brazil (see Mexico: 7 January 2010: Mexican Regulator Plans to Conclude Spectrum Auction During June and Brazil: 21 December 2009: Anatel Opens Public Consultation Period for 3G Auction).
• Plans to Consolidate Empire: On 13 January América Móvil submitted an offer for all outstanding shares of Carso Global Telecom, the holding company that controls fixed-line carrier Telmex International. The operator offers to exchange 2.0474 shares of its stock per each share of Carso Global Telecom. If accepted the move would give América Móvil a 60.7% share in Telmex Internacional and a 59.4% share in Telmex, Mexico's largest phone carrier. América Móvil also said it will submit an offer for the remaining 39.3% of Telmex Internacional not controlled by Carso Global Telecom at 11.66 pesos per share or América Móvil shares at a ratio of 0.373 to 1. The move aims to combine the operations of América Móvil and Telmex Internacional, both controlled by Mexican billionaire Carlos Slim, to reduce administrative and network costs. The consolidation would also be in line with the company's strategy of offering multiple-play packages of wireless, land-line phone, internet, and cable TV services in countries such as Brazil—Telmex Internacional operates phone and cable TV networks in Brazil, Colombia, and five other South American nations (see Latin America: 14 January 2010: América Móvil Announces Bid for Carso Global Telecom).
• Competition Still a Thorny Issue in Mexico: Consolidation plans, however, have not been well received in Mexico, where different local groups have raised concerns over a possible merger between dominant telcos Telcel, América Móvil's Mexican arm, and Telmex Mexico (see Mexico: 20 January 2010: Cable Operators Oppose América Móvil-Telmex Merger), a situation that has been recently reconfirmed by the Federal Competition Commission (CFC; see Mexico: 15 December 2009: CFC Rejects Telmex Appeals on Market Dominance Ruling and Mexico: 29 January 2010: Mexican Regulator Ratifies Telcel Ruling on Market Dominance). The lack of effective competition in Mexico presents one of the greatest obstacles Slim's plans.