América Móvil cautious of bundled services despite benefits of merger

Friday, February 11, 2011

Latin American telecoms giant América Móvil (NYSE: AMX) is already seeing benefits from beginning to merge its mobile and fixed networks, but will not necessarily rush into offering bundled services in all of its markets, company CEO Daniel Hajj said during a conference call with investors.

The company announced in the fourth quarter an agreement with Alcatel-Lucent (NYSE: ALU) for a three-year transformation project to deploy an IP/MPLS mobile backhaul solution in 11 countries in Latin America.

This resulted from América Móvil's (which operates in most markets as Claro) takeover last year of its sister company Telmex Internacional.

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"By merging Telmex Internacional and Claro, one of the big gains we're going to see is having only one network for all the technologies - wireless, TV, video and broadband - and so of course the investments are going to be much more profitable than having separate networks for all these different services," Hajj said.

"I don't have any doubt that it's working. We've been working on that for only six months, and we're already seeing all the advantages in the network," Hajj said.

AMX is already offering bundled triple play services in Chile, Peru and Ecuador. In Mexico, Telmex cannot yet offer TV services, which has limited the ability of AMX to offer triple play.

However, Hajj cautioned that the company will not rush into offering bundled services in every country just to see cost efficiency, as the services provided will depend on individual market conditions.

"We're going to decide when and how we're going to do things depending on how it suits us. We need to be ready to provide those bundled services, but we want to be careful in each country with how we do it. We don't want to reduce revenue only because we want to do a bundled service," Hajj said.