América Móvil sees U.S. base shrink 10% Y-O-Y mostly on SafeLink losses

Customer booking trends are always changing, and to be frank it isn’t getting any easier for hotel companies to keep up.
Carlos Slim's carrier posted a quarterly loss of $494 million.

América Móvil's U.S. customer base declined 10.4% over the last year primarily due to customers leaving its SafeLink Wireless brand.

Shares of América Móvil sank more than 5% Wednesday after the carrier said natural disasters in Mexico and Puerto Rico contributed to a third-quarter loss of $494 million. The Mexico City-based operator said revenue was down 2.2% year over year in the quarter, and service revenue fell 1.9% from the same period last year.

América Móvil, which is controlled by Carlos Slim, grew its base of postpaid customers by 6% after adding 1.4 million users, but it reported 365,000 U.S. net disconnections “resulting from a cleanup of our base and from increased competition in the segment.”

Total U.S. revenues climbed 5.3% year over year, however, reaching nearly $2 billion, and equipment revenues increased 40.2% as adoption of equipment installment plans grew. U.S. ARPU was up 7.3% annually and .8% sequentially.

América Móvil attributed the losses in part to Hurricane Maria in Puerto Rico and two earthquakes in Mexico.

“In Puerto Rico we provided bonuses to our prepaid clients and credited monthly fees to our postpaid clients; in Mexico, Telcel and Telmex opened their networks at no cost to their clients for five days, following the earthquakes on September 19th,” the carrier said in a press release. “Excluding Puerto Rico—where service revenues collapsed 17.4%—and the U.S., revenue trends in our other operations remained very much in line with those seen through the second quarter.”

América Móvil operates TracFone, which is the largest MVNO in the United States and is in the midst of a steady—if modest—retail expansion. TracFone brands include Simple Mobile, GoSmart, TracFone, Net10, PagePlus, Total Wireless and SafeLink.

T-Mobile a year ago confirmed that it recently sold its Walmart Family Mobile business to TracFone, giving the prepaid service provider a massive presence in the world’s largest retailer. Walmart Family Mobile brought TracFone an additional 1.4 million customers, according to Wave7 Research.

América Móvil has seen its U.S. customer base shrink 10.4% over the last year primarily due to customers leaving its SafeLink Wireless brand, which provides services through the Lifeline program under the federally funded Universal Service Fund. The FCC implemented new Lifeline requirements last year in an effort to reduce fraud and cut costs.

“America Movil struggling in the U.S. in last 4 qtrs+,” Bill Ho of 556 Ventures tweeted Wednesday. “Lots of lifeline (Safelink) accounts gone likely.”

Meanwhile, the U.S. prepaid market has grown much more competitive over the last two years as smartphone penetration has reached saturation.

“Let me explain what’s happened in the U.S.,” CEO Daniel Hajj said on the earnings call with analysts, according to a Seeking Alpha transcript. “I think, first, I want to start that in the U.S., the competition is tough. The promotions and competitions are very aggressive… this year…. I think we’re going to have good results, even with top competition, because we're having tough competition in the prepaid market in the U.S. So that’s really what is happening.”