America Movil S.A.B. de C.V. (AMX)

[investora2z]

The company's prospects have been discussed in a report by Zacks. The analysts have maintained their neutral recommendation on America Movil. The company is expected to do well based on increased penetration of 4G mobile services and expansion of its PayTV platform. However, it is likely to face regulatory challenges especially in Mexico. Stiff competition in markets like Brazil and high promotional spending can lead to lower margins. Huge customer churn may also hurt topline growth. The PayTV business is doing very well and has become a significant revenue contributor for the company. However, being a low margins business, increase in PayTV's weightage can put pressure on the overall margins. It remains the largest player in Latin America, and is making investments for expansion of its network to serve the customers better. Launch of the 4G mobile services in Mexico will help the growth prospects of the company. Revenue growth is expected to be good in regions like Brazil and Mexico where the focus is on winning contract subscribers, thereby reducing the churning. The growth prospects are relatively better compared to some other players operating in more saturated markets. AT&T (T) and Verizon (VZ) are facing competition from old and new players like America Movil (AMX) and Deutsche Telekom (DTEGF.PK) who are giants in their respective countries. They are offering lower priced, less restrictive contracts which makes the competition more cost based. Availability of handsets without contracts e.g. at Wal-Mart (WMT) stores, and an increasing demand for used handsets is likely to make top-line growth difficult. Usell (USEL), which provides a platform for buying / selling used phones, reported phenomenal growth in revenues in the first half of 2013. These markets may undergo some consolidation, but the short term growth prospects are not that robust. For America Movil, the telecom bill in Mexico is likely to adversely impact the company’s performance. Going forward, the company is likely to face challenges, but the revenue growth prospects are relatively better.