TBY talks to Daniel Hajj Aboumrad, CEO of América Móvil, on local growth, the significance of data packages, and his outlook on penetration rates.
TBY As voice technology gives way to data, how is América Móvil adjusting to worldwide trends toward mobile computing?
DANIEL HAJJ ABOUMRAD Voice is moving to data. We are investing heavily in data networks and content. Our approach is three pronged: voice, data, and broadband video. We are thus creating networks capable of providing all three at once. It is a huge investment for América Móvil to be making in Latin America. In that respect, América Móvil is the leading investor in the region. Our investment is focused not only on the big cities, but also on small towns in order to provide not only voice but data services as well. Moreover, I believe that data developments are going to change the world. Your cell phone will be your computer, without the limitations of current smart phones. This will open up the sector to all kinds of changes, such as our Banca Móvil service, which allows the user to perform e-banking on the move.
How has your acquisition of Telmex changed your operations?
We acquired 61% of Telmex around one year ago, and are making an offer to buy the remaining shares. Technology is becoming more convergent, and so it made sense for us to acquire Telmex. This has been a strategy we have employed across Latin America, and it has been very successful.
What factors allowed América Móvil to remain resilient over the course of the global economic crisis?
There have been difficult years and I think there are more to come, but we are ready. We make sound investments and operate with the best technology, and this allows us to remain competitive in the market. The data segment is growing, and there is still a lot of room to grow. This will drive growth no matter what. Only 10% of our wireless subscribers have a smartphone. We want 50% to 60% or more to have a smartphone, and then use data. There is still a lot of work to do to move more and more people onto using data. To achieve this goal a large network is necessary and the right investments must be made. Except for Mexico and Argentina we provide all services, including wireless and fixed broadband and satellite and cable TV across our operations in Latin America.
What has been the net impact of your international pact with Vodafone in 2005?
This was a positive deal as Vodafone is a world-class company. In the markets where it is not present, we are there, and vice versa. This pact more or less provides for roaming possibilities. We also share some corporate customers.
How do you see the company growing in Latin America?
The current mobile penetration rate is around 80% in Mexico, so there is room to grow on that front. We are present in almost every country, and so we expect a lot of organic growth. There is one more acquisition pending in El Salvador, but other than that no large acquisitions will be made. The rest of the growth is going to be mostly organic. We also provide internet in Brazil through a cable company. We own 92% of the company, and will possibly buy the rest. On top of that, we will continue investing in the networks of the countries we are already present in.
How do you see TV and broadband penetration changing?
Telmex does not have a license to provide television services; however, if it did we believe penetration would increase as a result of competition. A lot of firms are investing in broadband, and as computers come down in price the penetration rate will increase. Tablet computer use will also increase the penetration rate of wireless broadband. Through Telmex we sell computers and provide comfortable payment options, and this is helping to increase the penetration rate, as it is currently low.
How significant is Mexico to América Móvil’s overall operations?
We are growing more in the rest of Latin America than in Mexico at the moment. We operate in a total of 18 countries, and most markets are growing at a faster rate than Mexico. Brazil is currently showing strong growth.
What is your forecast for the Mexican economy, and what does it signal for the future of América Móvil?
These are tough times, as the US and Europe have both been affected by the global economic crisis. Latin America is in a much better position, but I predict we will also be affected by a slowdown in growth in Europe and the US. We need to be prepared for this. América Móvil doesn’t hire too many people or increase costs when times are good as costs then need to be decreased when tough times are faced. Today, we are in good shape. We need to be prepared for the slowdown in Latin America, but I think we are still going to emerge in better shape than much of the world.
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