During the recent Q4 2014 earnings call, América Móvil’s CEO, Daniel Hajj revealed some details of the timeline for the company’s plans to spinoff its Mexican telecom towers into a new company. According to the CEO, the new company should be formed and operational by May or June after a formal presentation of the plan to shareholders in April.
The new entity will own and operate approximately 11,000 telecom sites and actively compete with the likes of American Tower which owns over 8,400 sites in Mexico. Mexico Tower Partners (788 towers), Centennial (~400), IIMT (~180), Torrecom (146) and QMC Telecom (tower count unknown) are also active in the country.
During the call, Andrew Campbell, an analyst from Credit Suisse, asked Mr Hajj if he thought the new entity could continue to be labeled as preponderant and whether that would have an effect on the company’s plan to increase tenancy ratio and seek new tenants.
Mr Hajj responded: “I think this tower spinoff at the beginning is going to have the same shareholders. […] We are working on that with the IFETEL. But there are other companies in Mexico, American Tower and other ones who are renting… So, I think this company is going to be open. It’s going to be a new entity, nothing to do with América Móvil. I’m not so sure that they are going to be looking as a preponderant company.”
In the overall uncertainty of how América Móvil’s new tower company will operate and how IFETEL will consider its position in the infrastructure market, in the meantime América Móvil has a new and aggressive competitor.
Originally a strong candidate to buy América Móvil’s assets, AT&T has made headlines over the past few weeks as it agreed to acquire Iusacell and Nextel, respectively the third and fourth operators in the country, and denied its intention to buy AMX telecom towers.
When asked about AT&T’s move South of the U.S. border, Mr Hajj commented: “the competitive landscape in Mexico is changing. What we’re seeing right now is that there is a new competitor; there are two companies merging in one and this new competitor, AT&T, of course is going to invest… But what we’re seeing as Telcel is that we’re going to have more competition and that we are going to have a competitor that is going to invest more… Everybody is going to need to invest. I think Telefonica is to invest more also.”
We are eager to follow the developments of América Móvil’s towerco as well as the disruptive impact of the entry of AT&T in the Mexican telecom landscape and we expect both forces to contribute to changing the state of play considerably over the next few months.