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America Movil Gets Nod to Enter Argentine Pay-TV Market

Zacks

Mexican telecom behemoth America Movil SAB AMX recently received regulatory approval from Argentina's National Communications Agency (Enacom) to enter into the pay-TV market of that country. Notably, the company has already established both wireless and wireline operators in Argentina.

Earlier, telecom operators were banned from providing pay-TV service in Argentina. However, with the government having initiated crucial regulatory changes at the end of last year, various telecom operators operating in Argentina are now altering their status to foray the pay-TV space. In this context, Enacom has allowed America Movil to offer audio-visual services via any kind of platform in addition to mobile, fixed voice and broadband services.

Also, incumbent telecom operators namely, Telefonica SA TEF and Telecom Argentina SA TEO have decided to explore the pay-TV zone of Argentina. Moreover, U.S. telecom giant AT&T Inc.’s T satellite-TV wing DirecTV is already providing pay-TV and mobile broadband services in the country.

Notably, in May 2016, America Movil’s owner Carlos Slim had a meeting with the Argentine president Mauricio Macri to assess investment opportunities in Argentina’s state-owned telecom operator, Arsat and Buenos Aires-based cable company TeleCentro. If the deal materializes, we may see America Movil acquiring a stake in Refefo Federal Fibre-Optic Network as well as on the Arsat-2 satellite.


On the flip side, America Movil is facing intense competitive pressure in Mexico. In 2014, the government of Mexico had introduced reforms within its telecommunications sector. The country’s telecom regulator, the Federal Telecommunications Institute (IFT), seeks to restrict the maximum hold of a company in the market to 50%.

As part of these reforms, the IFT has banned America Movil from charging national roaming fees. Further, the company will have to share its infrastructure with other operators, particularly in the local loop (last mileage) segment.

America Movil has also decided to launch a Mexican language TV channel in the United States called Nuestra Vision. Slated to be launched later this year, the new TV channel will be telecast by the America Movil unit Publicidad y Contenido Editorial. We believe the company’s expansion drive in Argentina and other international markets is fuelled by the growing competitive pressures on its home turf.

Price Performance of America Movil

America Movil is one of the strongest performers in 2017. In the last three months, shares of the company have rallied 15.49% in contrast to the industry’s decline of 2.16%. The stock currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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