America Movil, S.A. de C.V. - Company Strategy & Performance Analysis
The company enjoys a robust position in several markets such as Mexico, Colombia, Argentina, and Puerto Rico. America Movil’s total number of mobile subscriptions in Mexico increased at a CAGR of 0.9% during 2012-2016, from 70.3 million in 2012 to reach 73.2 million in 2016. In Mexico, declining handset prices and growing technology advancement (the launch of LTE and 4G networks) has accelerated subscriber penetration.
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Wide portfolio of operations enables America Movil to maintain its revenue stream
America Movil comprises a wide portfolio of operations across a large geographic area. The company offers mobile and fixed voice services which include airtime, local, domestic and international long-distance services, and network interconnection services. America Movil also offers data services which include value added, corporate networks, data and internet services. Additionally, America Movil also leverages its network and customer base to offer pay television (pay-TV) services.
Increase in operational expenses affecting profit margins
America Movil reported weak operational performance, which is a major concern. It posted an increase in operational expenses, which led to a decline in its operating margins. Although the company has good cash flow to support its operations, the company is focusing on acquisitions for expansion in other Latin American countries which will require significant capital expenditure.
Increasing investments in technology
The company has been focusing on investing in new technologies to remain competitive in the market. It plans to launch a 4.5G network in Mexico by the end of 2017 and launch 5G by 2020. In March 2016, America Movil planned to invest US$6,000 million in the Mexican telecom market over the next three years. AT&T aims to offer 4G LTE mobile internet service to over 100 million Mexican customers by the end of 2018.