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Telefonos de Mexico (TMX) |
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WIKI ANALYSIS
Telefonos de Mexico (TMX or Telmex), headquartered in Mexico City, operates in Mexico, the U.S., Puerto Rico, Brazil, Chile, Argentina, Peru, and Columbia. Most of the South American operations were acquired through the company's purchase of AT&T Latin America. The company, along with its subsidiaries, offers a wide range of telecommunications, data and video services, Internet access, and integrated telecom solutions to corporate customers. Apart from basic fixed-line telephone services, TMX provides Internet access services telecom and telecom-related services, such as directory, data transmission, and paging and interconnection services to other carriers in Mexico. Approximately 40% of the company's infrastructure and telephony lines are in Mexico City, Monterrey, and Guadalajara metropolitan areas. Over 73% of TMX's revenue continues to be derived from its subscribers in Mexico. The company earned P. $119 million in revenue and P. 19.8 million in net income in 2009.[1]
Company Overview
TELMEX has kept basic rates fixed over the last 9 years because it has been able to pass along the benefits of its technology and efficicency.The company is the price leader in providing computers largely because of their installment plans and multi-service packages
TELMEX has 83% of the fixed line market with 15.8 million local fixed billed lines in service in Mexico.[2]
Telefonos de Mexico met the “Acuerdo de Convergencia” (Convergence Agreement) requirements: Interconnection, Network Interoperability and Number Portability set out over 3 years ago. It is focused on providing competitive pricing for telecommunications services. Overall strategy has been to continue the previously laid out plans and promote the penetration of broad band services.
Business Segments[2]
- Local phone service (39.5% of Operations Income) - the company is a nationwide provider of local telephone service in Mexico, providing local telephone service to approximately 23 thousand communities throughout Mexico. Of all lines in service, 31.4% are in the Mexico City, Monterrey and Guadalajara metropolitan areas, with 21.4% in the Mexico City metropolitan area alone.
- National long-distance phone service (12.7% of Operations Income) - the nationwide domestic long-distance transmission network consists of 31.1 thousand kilometers of optical fiber connecting Mexico’s major cities, and includes secondary branches and additional transmission rings throughout Mexico designed to avoid network congestion.
- International long-distance phone service (7.1% of Operations Income) - the company is a nationwide provider of international long-distance telecommunications services in Mexico. International long-distance traffic with the United States, Canada, Central America and other countries is carried by a combination of fiber optic network, microwave transmission, satellite systems and submarine cable.
- Interconnection (15.4% of Operations Income) - services pursuant to which (a) long-distance, local and mobile phone carriers operating in Mexico establish points of interconnection between their networks and our network and (b) the comopany carry calls between the points of interconnection and our customers.
- Data Services (10.6% of Operations Income) - data services segment is comprised of corporate network services and Internet access service.
Subsidiary companies: Integracion de Servicios TMX S.A. de C.V., Alquiladora de Casas S.A. de C.V., Compania de Telefonos y Bienes Raices S.A. de C.V., Consorcio Red Uno S.A. de C.V., Telefonos del Noroeste S.A. de C.V., Uninet S.A. de C.V., and Telmex USA LLC.
Business Growth
FY 2009 (ended December 31, 2009)[1]
- Net revenue fell 4% to P. 119 million.
- Net income remained flat at P. 19.8 million.
Trends and Forces
Government Regulation[3]
The “Ley Federal de Telecomunicaciones” in Mexico establishes that if a company gains substantial market control, the Communications and Transport Ministry has the right to impose regulations regarding fees, service quality and information release. Further, the Federal Competition Commission has begun 7 investigations to determine companies that have gained substantial market control and has the right to begin new ones at any point in time.
Single majority share-holder
Carso Global Telecom (TELECOMA1-MX) owns 71.5% of all outstanding shares and has the capacity of naming most of the Board Members and can sway shareholder votes.
Synergies in Carso owned companies
Operations and joint ventures between Carso owned companies (directed by Carlos Slim Helu: Telmex International, Grupo Financiero Inbursa, S.A.B. de C.V., America Movil and Carso Global Telecom.
Fixed line reduction
Worldwide Trend towards fewer fixed lines in service is apparent in Mexico because of cellular telephony competition and the economic situation.
Broadband demand increasing
Broadband demand continues to show the growth of the previous five years increasing both the customer base as well as market share. Annual Average growth rate of 70.5%
Technical Convergence
Mexico is the only country in the OECD that does not have technical convergence despite having set out the requirements required for it over 3 years ago.
Competition
Competition derives from VoIP providers, cellular telephony, over 28 cable companies acting through over 60 subsidiaries, and wireless data plan providers. The competition can be summarized by the following companies:
- Alestra – in long-distance service
- Axtel – competition in local fixed line markets.
- Maxcom – competition in local fixed line markets.
- Megacable, Cablevision and Cablemas – in the cable provider market.
- Radiomovil DIPSA S.A. de C.V. and Movistar – in the mobile phone market
References
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