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America Movil S.A.B. de C.V. Message Board

  • investora2z investora2z Oct 10, 2013 6:45 AM Flag


    Zacks has recently maintained its neutral recommendation on America Movil. They expect the company to benefit from the increased penetration of 4G mobile services and expansion of its PayTV platform. They also mention that regulatory issues, stiff competition, huge customer churn and high promotional spending could hurt the company's prospects. The recent performance of the company confirms that it is the largest player in the Latin American markets with predominance in Mexico, Brazil and Columbia. The investments in expansion of its network is robust, and the launch of the 4G mobile services Mexico will help the growth prospects. The high promotional activities may lead to lower margins, but the topline growth is expected to be decent in Brazil and Mexico where it focuses on getting contract subscribers thereby reducing the churning. The growth prospects are better compared to the giants which are operating mainly in the North American markets. AT&T (T) and Verizon (VZ) face competition from America Movil (AMX) and Deutsche Telekom (DTEGF.PK) who are offering lower priced and less restrictive contracts. Availability of handsets without contracts e.g. at Walmart (WMT) stores is also expected to likely to hurt the prospects. Also, there is also an increasing demand for used handsets which is making topline growth a bit more difficult. Usell (USEL), which provides a platform for buying / selling used phones, reported great growth in revenues in the first half of 2013. There is some strategic consolidation going on, but the margins are likely to remain under pressure in the short term. For America Movil, the PayTV segment is doing great, and is one of the major contributors of revenue. However, this is a low margins business, and is expected to put pressure on the overall margins. Zacks also mentions that the new telecom bill in Mexico is likely to adversely impact the company’s performance. The dividend yield is also relatively low.

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