América Móvil is the largest telecommunications carrier in Latin America. It is founded in 2000 base on Mexico City, Mexico. “Movil dominates the Mexican wireless market with about 64% customer share and also serves more than half of fixed-line Internet access customers in the country” (America Movil SAB de CV ADR , n.d.). The central goal of this paper is to analyze SWOT and compared to other competitors in current situation,. In addition, I have some strategic recommendations which can solve current problems. First, América Móvil should build the 5G service in Mexico City. Secondly, they can launch other non-boarder plans to attract new customers. The last thing will be expand business operations in USA. I believe that based on my recommendation can bring them to the other level in the industry and increase revenue to be the better company.

 Organization

 América Móvil, S.A.B. de C.V. (América Móvil) provides telecommunications services including mobile and fixed voice services, mobile and fixed data services, internet access and paid TV, as well as other related services. (MarketLine, a Progressive Digital Media business. 2018). It has operations in 25 countries across the US, Latin America, the Caribbean and Europe. As of December 31 2017, the company has major wireless, fixed or Pay TV operations in 16 other countries in the Americas and seven countries in Central and Eastern Europe (MarketLine, a Progressive Digital Media business. 2018).

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History

Back to 1956, the establishment of Publicidad Turística, S.A., an affiliate of Teléfonos de México, S.A. de C.V. (Telmex), that published telephone directories. In 1981 the government granted this firm a concession for the installation and operation of a wireless telephone system in Mexico (América Móvil, S.A.B. de C.V, 2014). Publicidad Turística changed its name in 1984 to Radiomóvil Dipsa, S.A. de C.V., and in 1989 this company began operation under the Telcel trademark. Telmex began acquiring subsidiaries outside Mexico in 1999 (América Móvil, S.A.B. de C.V, 2014). A year later (2000), by the time it announced its intention to spin off América Móvil as an independent company for cellular and broadband Internet services, it was the largest mobile-service provider in Latin America, with about 10 million subscribers (América Móvil, S.A.B. de C.V, 2014).

 In 2003, América Móvil’s expansion was enhanced by its deep pockets and willingness to buy debt-ridden rivals on the cheap (América Móvil, S.A.B. de C.V, 2014). Then Slim’s lieutenants (chairman) came in to cut costs and make the enterprises profitable. According to América Móvil, S.A.B. de C.V (2014), “A big acquisition was the purchase of Brazil’s BCP S.A. from Banco Safra S.A. and BellSouth Corporation, for $643 million in cash. This made América Móvil Brazil’s second-largest mobile-phone operator”.

 By this time Telcel alone had invested $3 billion to far outstrip the competition in Mexico. Much of this money went to develop Global System for Mobile Communications (GSM), an increasingly popular rival to Code Division Multiple Access (CDMA), which prevailed in the United States. The company also was deploying or upgrading GSM networks in nearly all the other countries in which it was operating. By the end of 2004 América Móvil had begun providing many of the voice and data services supported by GSM technology, such as SMS, CSD, high-speed CSD, and GPRS.

 The company was success in the United States, where its TracFone business counted more than 21 million wireless subscribers, the most prepaid customers in the country. In 2012, the company spent an estimated $5 billion to acquire substantial stakes in two European telecommunications companies. According to América Móvil (2014), “América Móvil acquired a 29.77 percent interest in Netherlands-based KPN Telecom and a 23.69 percent stake in Austria-based Telekom Austria. By the end of 2013, América Móvil served 265 million wireless customers and provided wireline service to 31 million customers. It provided broadband Internet access to 18.8 million subscribers and subscription television service to 18.5 million households” ( “América Móvil versus Telefónica: 2007-13”).

Services and Products

 América Móvil pay attention on services more than products. Its products and services into two categories: wireless operations and fixed operations. Under wireless operations category, the company offers postpaid and prepaid wireless voice and data services with a variety of plans to cater the requirements of different market segments. Its data communications services include internet access, messaging and other wireless entertainment and corporate services. In 2017, the company had 279 million wireless voice and data subscribers.

The company’s fixed operations category provides fixed voice services including local, domestic and international long-distance public telephony; data services, including data centers, data administration and hosting services to residential and corporate clients; broadband services; IT solutions; and Pay TV solutions. In FY2017, the fixed voice, data, broadband and IT solutions had revenues of MXN229.1 billion or 22.4% of the company’s total revenue. (MarketLine, a Progressive Digital Media business. 2018).The company’s key products include batteries, belt clips, chargers headsets, broadband cards, netbooks, mobile phones and telecommunications equipment.

Revenue and Employee

The following graph shows the revenue for the past five years:

We can see the América Móvil’s revenue is slightly growth, even though the number of employee are decreased after 2015. In 2015, América Móvil is the fifth telecommunications company in wireless firms in the world (Top Wireless Firms Worldwide, 2019). Unfortunately, in 2018, the world’s largest telecommunications Companies are AT&T, Verizon Communications, and China Mobile etc. (Ponciano, 2018). América Móvil is not even in the top 10.

 “By the very early part of the 20th century, AT&T dominated the

industry through ownership of the great majority of telephony exchanges in the country” (Okoeguale & Loveland, 2018). Through to the technological progress and using habits, wireless has gradually replaced wired products. In the industry, company purchase network access and capacity from telecommunications carriers and resell wired and wireless telecommunications services to businesses and households. Most major carriers provide network access to resellers on a wholesale basis and also own reseller brands. According to Telecommunications Resellers (2019), “worldwide, the wireless telecommunications reseller market was about $55 billion in 2017, a figure that is expected to exceed $120 billion by 2024, according to Global Market Insights” (para. 2). Europe is the largest market for the industry. The Asia region, China and India, represents a major growth opportunity. The US telecommunications resellers industry includes about 2,100 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $20 billion.

Nowadays, The internet is a major sales channel. MVNOs (mobile virtual network operators) generally do not operate physical stores, choosing to bypass paying retailers high commissions and sales incentives while still fighting for shelf space. They commonly promote their services through the internet, social media, and viral and multi-level marketing. According to Telecommunications Resellers (2019), ”Domestic demand for telecommunications services is forecast to grow at an annual compounded rate of 3% between 2019 and 2023”. Another research shows that “it is projected that the revenue of telecommunications resellers in the U.S. will amount to approximately 23.2 billion U.S. dollars by 2022” (Stipp, n.d.).

        Strengths

 América Móvil has established itself as one of the largest telecommunications company in Latin America. It operates across 17 countries in Latin America. In addition, America Móvil is the largest provider of wireless communications services, fixed line, broadband and PayTV services in Latin America based on the number of revenue generating units (RGUs). Base on the number of subscribers, it is the largest market share in Mexico and the third-largest in Brazil. According to MarketLine, a Progressive Digital Media business. (2018), “as of December 2017, the company has 73.85 million wireless subscribers in Mexico and 59.02 million in Brazil”.

Extensive network infrastructure is the other reason why América Móvil become the largest telecommunication company in Latin America. “As of December 31, 2017, the main components of the company’s infrastructure comprised of 163,033 base stations (of which 65% were equipped with 3G and 4G capabilities); a fiber-optic network with a range of 815,000 km, with its network passing approximately 70 million homes at the end of FY2017; a submarine cable system with a capacity of over 168,000 km, including 17,500 km from the AMX-1 submarine cable, which extends from the US to Central America and Brazil and provides international connectivity to all of its subsidiaries in these geographic areas; and nine satellites through Star One, the company’s subsidiary with an extensive satellite system in Latin America with a fleet that covers the US, Mexico, Central America and South America” (MarketLine, a Progressive Digital Media business, 2018).

The company has lots of communication towers across a large geographic spread,  providing a wide portfolio of services. América Móvil offers mobile and fixed voice services, which include airtime, local, domestic and international long-distance services, and network interconnection services. They eliminate the Mexico-U.S. border and launched the non-border plan in 2015. This is a positive effect to América Móvil. They also offers services to business customers except to the retail customers. The company provides services over a large base of customers spread across 25 countries.

        Weaknesses

 Even though América Móvil revenue increased in the past few year, the operational performance declined. América Móvil exhibited a decline in the operational performance during the review year. According to MarketLine, a Progressive Digital Media business (2018) indicated, “The company reported operating income of MXN100,143.3 million in FY2017, as compared to MXN 109,610 million in FY2016, with an overall decline of 8.6% over the FY2016” (Weakness). This was primarily due to the impact of foreign currency exchange loss of MXN13.8 billion as compared to a loss of MXN40.4 billion in FY2016.

        Opportunities

 As I mentioned above, from 2019 to 2023, the demand for telecommunications services will grow at an annual compounded rate of 3% (Telecommunications Resellers, 2019). The company may benefit from the growing global telecom service industry. Consumer’s preference for faster data connectivity, quick video streaming with high resolution and rich multimedia applications have led the operators to focus data and video.

 The second opportunities is that América Móvil had a contract with International Olympic Committee. According to MarketLine, a Progressive Digital Media business (2018), “América Móvil signed several strategic agreements in 2017 to expand its business. In November 2017, the company entered into an agreement with the International Olympic Committee for the broadcasting of Summer Olympic Games through company’s digital and pay TV platforms for the period of 2018 to 2024”. This significant opportunity will increase revenue in a long-term basis.

 América Móvil could benefit from the growing cloud computing market. Nowadays, people used to store in the cloud instead of physical storage. Due to América Móvil has their own fluctuations, cloud-based operations can help the company to handle demand fluctuations, scale their operations instantly and access systems and services over a variety of devices at a lower cost.

        Threat

First of all, the company is exposed to the risk of rapid technological changes because of the operations.  The telecommunication is subject to rapid technological changes; new and enhanced product specification requirements; evolving industry standards; and changes in the way technology products are distributed and managed. While technological innovation is the typical characteristic of the telecommunication industry which drives the demand for new products and services. It also existed products obsolete. “If América Móvil is unable to adequately adapt to the emergence of alternative means of distribution for internet and broadband services the company’s future operating results may be adversely impacted” (MarketLine, a Progressive Digital Media business, 2018).

Secondly, foreign exchange risk will make América Móvil loss money. América Móvil operates in 25 countries worldwide and is faced to fluctuations in foreign exchange rate. Appreciation of the company’s operating currencies generally results in foreign exchange gains, while depreciation of these currencies results in losses. Although the company has major business operation in Latin America and Mexico, it still exposed the risk of exchange. For instant, compare to 2016, the operating income decline of 8.6% in 2017 because of foreign currency exchange.

Finally,  the most serious problem is competitors. As the number of people who use telecommunication services increase, the number of telecom companies increase at the same time. The increased use of networks for value- added services has led to the emergence of new players, including over-the-top (OTT) providers.

Competitive pressure will lead the company to lower the price for services as well as advertising and promotional spending. These developments and actions by America Movil’s competitors may negatively impact the company’s operation results and its ability to attract and retain customers. Also, increased competition may adversely affect the market share of the company. América Móvil’s primarily competitors included AT&T and Verizon in the U.S. , and Telefonica Brasil (VIV) and TIM Participacoes in Latin America.

AT&T and Verizon are the biggest competitors in United State. AT&T is the top one telecom companies in the world (Ponciano, 2018). AT&T, which acquired BellSouth in 2006 and DirecTV in 2014, provides services in more than 200 countries and covers more than 355 million people with both wired and wireless services. The market value is $198 billion US dollars. Additionally, AT&T continues to see large players cope with industry setbacks through widespread acquisition — often by dabbling into more market-friendly industries (Ponciano, 2018).

Verizon is the number two on the telecom and steady at number 18 in the global rankings. Based on Ponciano (2018) said,  “New York-based Verizon completed its $4.5 billion acquisition of Yahoo in June 2017, when the firm said it’d be combining its freshly acquired Internet assets with its AOL brands to form a new subsidiary called Oath” (para. 5).

In Latin America, Telefonica Brasil (VIV) and TIM Participacoes (TSU) are América Móvil’s competitors. Telefonica Brasil (VIV) is the Brazilian subsidiary of the Spanish telecom giant Telefónica. According to Khaitan (2017) said “the company [Telefonica Brasil (VIV)] entered Brazil in 1998 while privatization of state owned Brazilian telecom company Telebras was taking place”. Telefónica began their operations in Brazil under the brand Vivo in 2003 through a joint venture with Portugal Telecom. In 2015, Telefónica Brasil acquired GVT to become the largest telecom operator in Brazil. As at June 2017, Telefonica served nearly 97.6 million customers in Brazil (Khaitan, 2017).

TIM Participacoes is the Brazilian arm of Italy based telecom provider Telecom Italia Mobile (TI). “The company has nearly 61.3 million customers in Brazil and is the first mobile company to service all states in the country” (Khaitan, 2017). Moreover, TIM Participacoes has been a standout in Brazil’s wireless phone market.

 During this fast technology innovation century, all the companies try to improve themselves to be the fastest and newest one. People always cannot satisfied for the data speed. Building the new 5G coverage will be the main mission for América Móvil. The competitor Verizon already turned on its 5G network in parts of Chicago and Minneapolis in April 2019 (Brown, 2019). Base on the main customers of América Móvil, it is good to start building 5G services in Mexico City. According to Mexico needs a lot more telecommunications towers (2018),” after telecommunications reforms in 2015 Telmex-América Móvil, once a near monopoly, had to divest its telecom tower operating business. It created a company called Telesites that owns some 12,000 towers” (para. 9). In Mexico City, América Móvil already have their own communication towers. It is easy for América Móvil to upgrade and improve 5G service, as opposed to other telecommunication carriers that don’t have their own communication towers. After upgrate and improve 5Gservice, América Móvil can collect consumers feedback and adjust their services to improve system, including software and hardware services. After building the stable system and good quality of services, América Móvil can expand their service to Latin America and America. América Móvil can sell the phone in a package plan to entice customers and increase revenue. By using this strategy, America Móvil can win new customers while providing them with fast, 5G service.

 It is a good time to build more communication towers in Mexico now. According to Mexico needs a lot more telecommunications towers (2018), “If the Mexican telecommunications industry is to be competitive it needs at least 80,000 communications towers to support its networks, according to the Federal Telecommunications Institute. But it currently has only 27,000” (para. 1).  Building more telecommunication towers will bring forth faster data speed, thereby attracting new customers.

 The other recommendations will be increase more non-border plans. They eliminated the Mexico-U.S. border and launched the non-border plan in 2015. It was a good start for them. América Móvil already have good “non-border’s service” reputation in the industry, so expand the other non-border plan will be good for them. Due to América Móvil current situation, it is easier to launch the other non-border plans than the other companies. As I mentioned before, América Móvil have lots of communication towers across a large geographic spread, including 17 countries in Latin America, USA, the Caribbean and Europe. They can use their current communication towers and overcome the technology to build the comprehensive communication area services.

The target customers will be the business man who travel between Latin America and United Stated. América Móvil can provide the special plan, which is high speed data without changing SIM card in different area, to the business used. It is a lot easier to the business man. The other target customers will be the family who work or immigrate to the other country. Because of lots of people immigrate or work in the USA from the other country, this non-border plan will work. They can contact with their family easily and quickly. This can not only attract customers but also increase revenue.

 The last recommendation will be expand business operations in USA. América Móvil already entry America telecommunication industry more than five years, but not a lot of people know them, especially in the west coast. In the west coast, the most popular telecommunication will be AT&T and T-Mobil, which are the biggest competitors in USA. They should advertise more to make people familiar with themselves. América Móvil can use their advantages, non-border plan, to bit their competitors. Even though some of competitors have non-border plan, América Móvil can provide lower fee plan due to their communication towers spread across a large geographic. Based on this advantage, América Móvil will allure customers to use their services (products). 

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