América Móvil's TracFone adds just 101K subs in Q4 as parent notes pressure in Mexico from AT&T

América Móvil's U.S. MVNO, TracFone Wireless, posted weaker subscriber growth in the fourth quarter than it did in the year-ago period. The parent company, an international telecoms giant, also acknowledged the obvious: it is facing more competition in its core market of Mexico from AT&T (NYSE: T) and Telefónica.

TracFone ended the fourth quarter of 2014 with 26.006 million subscribers, up 101,000 from the 25.904 million it had at the end of the third quarter. In the fourth quarter of 2013 TracFone added 616,000 net new customers.

TracFone posted revenue in the fourth quarter of $1.8 billion, up 13.8 percent year-over-year, with service revenues rising 12.1 percent from the year-ago period. The company said average revenue per user inched up 0.8 percent to $20, mainly driven by data revenue growth of 14.3 percent.

However, TracFone's churn jumped to 4.2 percent from3.6 percent in the year-ago quarter, and its EBITDA plunged nearly 40 percent to $72 million from $119 million a year ago. Further, TracFone recently agreed to pay $40 million to the Federal Trade Commission to settle charges that it duped millions of consumers by advertising unlimited data service and then throttling customers' speeds or cutting their service off entirely when they exceeded certain data allotments. The FTC said TracFone did not properly disclose its throttling practices.

Turning to Mexico, América Móvil acknowledged the changing landscape. "There are now three important operators with global scale participating in the sector, which points the way towards greater investments and a rapid development of the telecommunications sector in our country," the company said.

AT&T has completed its acquisition of Mexican wireless carrier Iusacell and plans to take control of NII Holdings' Nextel Mexico business too. Combined the two Mexican wireless carriers have around 12.2 million total subscribers. The deals will also give AT&T around 100 MHz of total nationwide spectrum in Mexico. AT&T plans to create what it has dubbed the first-ever "North American Mobile Service area" covering more than 400 million consumers and businesses in Mexico and the United States. The carrier moved that process along by announcing that customers on its Cricket Wireless prepaid brand with $50 and $60 plans can now make unlimited calls to Mexico.

AT&T CEO Randall Stephenson told investors last month that the carrier is not going to snap up assets that América Móvil is going to divest, and will instead focus on growing its business in Mexico via its acquisitions of Iusacell and Nextel Mexico. Thanks to a new antitrust law Mexico instituted in July 2014, América Móvil is seeking to offload some assets as part of an effort to get its market share in Mexico below 50 percent from around 70 percent.

"The América Móvil thing is just too uncertain ... I will say it again, we've got all we can handle right now in Mexico," Stephenson said.

For more:
- see this release (PDF)
- see this WSJ article (sub. req.)
- see this Bloomberg article
- see this Reuters article

Special Report: Wireless in the fourth quarter of 2014

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