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Maxcom Tele SP Ads (MXT) |
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WIKI ANALYSIS
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Company Overview
Maxcom is the only telecommunications concessionaire to offer quadruple-play services (voice, video, data and cellular) under its own brand.
In 1997 the company received permission to install a telecommunications network which could/would provide local, national and international telephony and data transfer services. In 2006 Maxcom obtained permission from the Secretaria de Comunicaciones y Transportes (SCT – Communications and Transport Office) to provide cable television services and audio in Puebla. In 2007 the company obtained permission to provide mobile virtual network operator services which positions MXT to provide mobile telephony services in Mexico. [2]
The company has a history of providing innovative services like an all-digital switching network, the first company to provide VoIP, the first triple-play voice provider, first unbundled quadruple-play and a program of Paid TV using internet protocol. MXT follows a cluster strategy which is divided in three stages: identifying, deploying and penetrating the clusters.
The company provides services in Mexico City, Puebla, Queretaro and San Luis Potosi using a penetration strategy in niche markets to take advantage of network density and economies of scale. [3]
Business and Financial Metrics
- EBITDA margin remained constant at 25% during 2009 with third quarter revenues being 649MM MXN increasing previous quarter revenues by 1%. This was due in part to an increase in 4% of the company’s customer base to 224,779.
- In 2008 as per a triple-play agreement signed in 2005 between Maxcom and Megacable to eliminate strategic partnerships MXT sold back the rights to about 10k users to Megacable for about 26MM MXN.
- Total revenues after the first 9 months of 2009 were 1, 931MM MXN, a 4% decrease from 2008 numbers. Residential revenues which represented 37% of all revenues in 3Q09 decreased from 41% in 3Q08. The decrease meant a loss of 54MM MXN due in large part to the termination of the agreement with Megacable, a decrease in usage charges, lower local usage and lower installation fees. This was partially offset by an increase of 14MM MXN in recurrent char ges in TV services.
- Public telephony revenues increased 5% to 119MM MXN due to an increase in the base of public telephones installed. This increase however is offset by the decreasing average revenue per unit.
- The Network operation cost increased by 2% in 3Q09 to reach 289MM MXN due to an increase in network operating services. Technical expenses and installation expenses decreased.[4]
- On November 15, 2007 Maxcom acquired Sierra Comunicaciones Globales S.A. de C.V. for 3MM USD. The acquired company had two strands of fiber optic within Maxcom’s network. At the time of acquisition Sierra had no operations.[5]
- In 2008 capital expenditure was 1,631.0BB MXN and 2009 expected capital expenditures were 880.1MM MXN all of which is meant to continue building network infrastructure.[6]
Business Segments
- Residential (39.34% of total revenues): products include LineaMax Residencial (high-quality wire-line telephone), Larga Distancia Max (domestic and long-distance telephony services), CentralMax (intercommunication services), I-line (VoIP service), Internet Max (dial-up internet service), SpeediMax (DSL Internet service), AssistelMax (emergency response services), paid TV services, and Maxcom Cel (residential mobile communication services).
- Business (30.15% of total revenues): product offering includes LineaMax Comercial (parallel to LineaMax Residencial for business), CentralMax (interconnection services), TroncalMax Digital (digital trunks), TroncalMax Analogica (provides connectivity to analog private branches), Maxcom Cel (business mobile communication services), SpeediMax (High-speed internet services), 1-800 numbers (toll-free numbers), dedicated internet service, digital private lines, hosted private branch exchange, I-line, E-security, SOSMax and Audio Conference services.
- Public Telephony (15.98% of total revenues)
- Wholesale (13.40% of total revenues)
- Other (1.13% of total revnues)[7]
Subsidiary companies:
- Corporativo en Telecomunicaciones, S. A. de C. V.
- Maxcom Servicios Administrativos, S. A. de C. V.
- Maxcom SF, S. A. de C. V.
- Outsourcing Operadora de Personal, S. A. de C. V.
- TECBTC Estrategias de Promoción, S. A. de C. V.
- Telereunion, S. A. de C. V.
- Telscape de México, S. A. de C. V.
- Sierra USA Communications, Inc.
- Sierra Comunicaciones Globales, S. A. de C. V.
Key Trends and Forces
Convergence Agreement
In 2006 the Mexican government issued the non-binding agreement “Agreement of Convergence of Fixed Services of Local Telephony and Restricted Audio and/or Television that are provided through Wired and Wireless Public Networks” also known as the Convergence Agreement. This allows telecommunications service providers to include services not originally included in their original concessions.
Interconnection between TELMEX and Maxcom
In 1999 Maxcom and Telefonos de Mexico (MXK:TELMEXL) entered a contract to provide interconnection services. Under the terms of the agreement Maxcom will provide interconnection services in long-distance calls terminating in Maxcom’s local network and vice-versa.
Mexican Shareholding Rights
Under the Mexican Federal Telecommunications Law and Foreign Investment Law no more than 49% of shares of a Mexican corporation with concessions to provide telecommunication services may be held by foreigners. The company does have permission to issue up to 95% of its capital stock. [9]
Trends in a growing telecommunications network
The expansion of a network like Maxcom’s requires significant capital expenditures which paired with historical losses provides uncertainty in MXT’s ability to continue funding its projects and repaying its debt flows. Further, construction of such a network depends on local (municipal and regional) political rulings, ability to obtain permits to use the right of way, third party delays, the continuity of MXT’s concessions and physical damage to infrastructure.
Peso depreciation
While most of Maxcom’s revenues are in pesos (MXN), the majority of the debt held by the company and capital expenditures are denominated in USD. The possibility of Mexico issuing exchange control rules (which there is a historical precedent for) would make it difficult for companies holding debt denominated in USD to service their debt.
Competition
MXT competes in the telecommunications market, value-added products, and price. This means competitors are wire-line and fixed wireless local telephone service providers, mobile wireless competitors, cable television providers and Internet service providers.
The main competitor is Telmex, a company with 85.6% of the phone service market and 98.6% of internet provider market.
Other noteworthy competitors are companies in the local telephone markets that appeared after the 1997 opening of the wire-line communications market:
- Axtel – services 27 cities targeting the high-end residential, small and medium business segments.
- Alestra
- Megacable
- Marcatel
- Bestphone
- Vox IP
Megacable, Marcatel, Bestphone, and Vox IP stand to become bigger competitors if they gain last-mile connectivity by forming strategic alliances with cable service providers.
Maxcom has established a number of strategic alliances to provide a more robust service. These alliances include Megacable which ran from 2005-2006 and involved leasing capacity. Alcatel Internet Protocol Television Supply Agreement which allows Maxcom to provide on-demand video capabilities. [10]
References
- ↑ http://www.nyse.com/about/listed/mxt.html
- ↑ Company 20-F/A, July 02, 2009
- ↑ Company 20-F, June 30,2009
- ↑ Company 6k, October 28, 2009
- ↑ Company 20-F/A, July 02, 2009
- ↑ Company 20-F, June 30,2009
- ↑ Company 20-F, June 30,2009
- ↑ Company 20-F/A, July 02, 2009
- ↑ Company 20-F/A, July 02, 2009
- ↑ Company 20-F, June 30,2009
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