Mexican Telecom giant America Movil S.A. de C.V.’s (AMX) subsidiary Claro has unveiled its plan to invest $249 million in Argentina in 2012 to build additional cell sites and extend its fiber-optic connections across the country. The new investment is in addition to the previously declared $1 billion of investment in fiscal 2012.
"Cell site" is a term used to describe a site where antennas and other communication related equipments are placed, usually on towers to create a cell in the existing cellular networks. The additional investment would enable the company to build 150 cell sites in excess of its initial planning, which in turn would increase the number of cell sites to be built during the year to 450.
Claro, the largest mobile operator in Argentina with a customer base of almost 20 million, faces stiff competition from Telecom Argentina SA (TEO) and Telefonica SA (TEF). The Mexican company is extending its fiber-optic cable network in different parts of Argentina to extend its retail broadband access service which could partially offset its weak landline business.
Argentina possesses one of the highest mobile ownership rates in the world which stands at 142 mobile phones for every 100 residents and handily beats its American counterparts Brazil and the U.S. According to research firm IDC, the smartphone market is expected to grow at a CAGR of 12.7% from 2012–2016, which could increase the ownership rate even further.
To sustain this increasing adaptation of smartphone the company has recently launched 4G services, which is the first of its kind in Argentina and offers a speed of up to 5MB per second. It is believed that to support the increased demand of data traffic from smartphone users, the company is expanding its cell sites which when completed will put the number of cell sites connected by fiber-optic cable to more than 1400.
The current Zacks Consensus Estimates for America Movil is pegged at $1.04 for the second quarter with a growth rate estimate of (53.97%). For 2012 and 2013, the Zacks Consensus Estimates stands at $2.22 and $2.08 with growth rate of (6.14%) and 4.67%, respectively.
We, maintain our long-term Neutral recommendation for America Movil S.A.B. de C.V. Currently, AMX has a Zacks #3 Rank, implying a short-term Hold rating on the stock.
More From Zacks.com