America Movil loses 458,000 U.S. customers, mainly on TracFone and SafeLink

Shares of America Movíl plunged nearly 12 percent last week after the carrier posted a disappointing quarter including a 17 percent year-over-year decline in EBITDA. The company lost 458,000 U.S. customers during the quarter, primarily under its TracFone and SafeLink brands, and its U.S. revenue of $1.8 billion was down 3.3 percent from the prior year. 

The company's ARPU in the U.S. was up 1.4 percent to $21, but service revenues were down 0.5 percent due to its customer losses.

America Movíl remains by far the largest MVNO in the United States through its various brands, including TracFone and Straight Talk. The carrier ended the first quarter with 25.2 million U.S. customers.

The company partly blamed its 458,000 U.S. customer losses on new FCC Lifeline requirements that include disconnecting customers who aren't eligible.

Overall, the Mexico City-based telecom said profits in its home market narrowed to 35.7 percent in the quarter, down from 41.7 percent a year earlier, as it struggled with Mexico's antitrust crackdown and aggressive promotions from Telefonica SA and AT&T, which has moved aggressively into the country. And America Movíl lost 908,000 prepaid customers in Brazil, its second-largest market, as sales fell 0.7 percent in the South American country.

Verizon CFO Fran Shammo said two weeks ago that the top U.S. carrier considers TracFone its prepaid offering, essentially opting to outsource its prepaid business. But America Movíl CEO Daniel Hajj said TracFone will continue to work with multiple operators in the U.S., negotiating the best deals it can with each carrier.

"I think Verizon at this stage has a good share of our traffic, and yes, if Verizon is giving us a more competitive offer of course we can move more traffic to Verizon. But it's going to depend on the offers that we receive, and that's what we have been doing for the last two or three years," Hajj said last week, according to a Seeking Alpha transcript of America Movíl's earnings call. "Verizon has been very aggressive and that's why they have been growing with us in the last five years. So they have a big share of our market."

Forbes reported that Chairman and Carlos Slim lost $3.4 billion due to the plunge of America Movíl's stock, losing his spot as the world's fourth-richest person.

America Movíl claims roughly 70 percent of Mexico's fixed-line and mobile telecom market, but the Mexican government has introduced regulations over the last year aimed at spurring competition. AT&T has moved aggressively to capitalize on those new policies, spending $4.4 billion last year to acquire operators Iusacell and Nextel Mexico. AT&T has also vowed to spend $3 billion to cover 100 million people in Mexico with LTE by the end of 2018.

AT&T last week reported $537 million in revenues in Mexico during the first quarter, posting an operating loss of $251 million as it expanded in the market. AT&T added 566,000 customers in Mexico in the first quarter.

For more:
- see this America Movíl press release
- see this Seeking Alpha transcript

Related articles:
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