America Movil S.A.B. de C.V.’s (AMX) significant subscriber gain, healthy wireless data service demand and strong momentum in the PayTV segment will drive the company’s revenues higher in the coming quarters. The company continues to expand its network services and boost data revenues through deployment of the advanced 3G wireless technology and increased smartphone penetration.
America Movil is focused on improving service offerings and continues to invest aggressively in cellular network expansion in Latin America. Data and Broadband remain as two major growth drivers. The company is developing new generation broadband networks, both in fixed and mobile platforms and plans to spend approximately $8–$9 billion over the next four years for the expansion of data networks.
This development should boost data revenues. The company is deploying Alcatel-Lucent mobile backhaul solution to offer next-generation mobile services in Latin America. Alcatel-Lucent has already supplied an end-to-end 4G LTE network to Claro Uruguay, a division of America Movil.
In Nov 2014, Claro Argentina – a subsidiary of America Movil – emerged as a major gainer in the airwaves auction conducted by Argentina in the month of October. The Argentine government has started distributing the spectrum lots and Claro has become the first company to win airwaves allocated for 3G and 4G services. Argentina's national federal entity, Secretaria de Comunicaciones (SeCom), revealed that Claro has won airwaves of frequencies 1800 MHz and 1900 MHz bands designated as 3G spectrum and two 4G frequency bands of 1700 MHz and 2100 MHz.
However, we are concerned about the interconnection rate reductions in both Mexico and Brazil, which have considerably pressurized America Movil’s margins. The company is also concerned about the regulatory issues in Mexico.
America Movil currently has a Zacks Rank #2 (Buy).
Other Stocks to Consider
Some other stocks worth considering in this sector include BlackBerry Ltd. (BBRY), Ceragon Networks Ltd. (CRNT) and Orange (ORAN). All these stocks hold the same rank as America Movil.
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