América Móvil quells speculation that it might purchase T-Mobile

América Móvil does not have any plans to acquire a U.S. carrier, the company's management said during the carrier's second-quarter earnings call. The statement serves to squash speculation that América Móvil might purchase T-Mobile US (NYSE:TMUS) with the money it expects to raise through a sale of its assets.

Meanwhile, TracFone Wireless, América Móvil's U.S. MVNO, reported that it barely had any subscriber growth in the second quarter.

According to reports from the carrier's earnings call, América Móvil's management said that the company hasn't changed its U.S. strategy and isn't planning to purchase a U.S. carrier. The company's management said América Móvil is comfortable with how TracFone is working in the United States.

Indeed, TracFone already counts fully 25.5 million customers in the United States--it is the country's fifth-largest carrier in terms of subscribers. But TracFone doesn't own a network; instead, as an MVNO it piggybacks on the networks of carriers like Verizon Wireless and T-Mobile US. TracFone's most recent transaction was for MVNO Page Plus Cellular, which gave the company an extra 1.4 million customers.

América Móvil said last week that it would sell assets to bring its market share in Mexico to below 50 percent from around 70 percent to head off a confrontation with regulators. Such sales could produce a lot of cash, which had sparked speculation that the company might try to make inroads into the U.S. market, possibly through a purchase of T-Mobile. 

"A more meaningful entry into the U.S. with the acquisition of [T-Mobile] could make strategic sense," UBS analyst John Hodulik told the Wall Street Journal. Hodulik said the sale of the carrier's Mexican assets could net more than $15 billion. 

If it doesn't use the money to purchase T-Mobile, América Móvil could use the cash to purchase additional U.S. MVNOs, or it might acquire assets that Sprint and T-Mobile might have to divest if regulators approve a deal between them. It could also use the money to expand its telecom businesses in Brazil or Europe. Indeed, América Móvil is already heavily involved in the European market--it revealed last week it will own 50.8 percent of Telekom Austria following the completion of its offer for shares in the Austrian operator that it did not already own.

Meanwhile, América Móvil's TracFone said it added just 8,000 subscribers in the second quarter, ending the period with 25.519 million total customers, up from 25.511 million at the end of the first quarter. That's a better result than the 192,000 subscribers TracFone lost in the second quarter of 2013 amid a company-wide effort within the parent firm to shut off the service of inactive users. However, the results are a drop from the first quarter of 2014 when TracFone added 452,000 customers organically in the quarter apart from the Page Plus deal.

TracFone's total revenue in the second quarter increased 14.8 percent to $1.71 billion, and service revenue increased 18.1 percent to $1.58 billion. Average revenue per user increased to $21 from $19 in the year-ago period and churn fell year-over-year to 3.8 percent from 4.1 percent.

For more:
- see this Twitter post
- see this Reuters article
- see this WSJ article (sub. req.)
- see this earnings release (PDF)
- see this separate WSJ article (sub. req.)

Special Report: Wireless in the second quarter of 2014

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