América Móvil likely to reduce 2020 capex due to COVID-19

Mexican telecom giant América Móvil could reduce its previously announced US$8.5bn capex for 2020 as the company reported a hefty Q1 loss due to the COVID-19 crisis. 

“We can defer part of our capex, an important part of our capex ... without sacrificing quality, capacity, availability and always having the best technology,” CEO Daniel Hajj told analysts in a conference call on Wednesday.  

The final decision will depend on how the crisis progresses over the next quarters, he said, adding that certain projects will be prioritized over others. 

“When we have more visibility, we’re going to decide what to do, which projects we’re going take out in [3Q20] and which ones we’re going to [keep] because things are moving,” Hajj said. 

Given the increased traffic via fix broadband services that the contingency has caused, the CEO said internet projects would be considered a priority. 

“We’re going to move [internet projects] faster than what we have been doing, but other ones, maybe, we’re going to stop them. We need to see really what’s going to be at the end of these and what’s traffic going to be like and then we’re going to make a decision,” he said. 

Network traffic grew 10% more than usual in Q1, Hajj said. 

América Móvil reported on Tuesday a net loss of 29.4bn pesos (US$1.24bn), mainly attributed to the weakening of Latin American currencies against the dollar, compared with earnings of 19.6bn pesos a year earlier.

ALSO SEE: América Móvil: revenues by service

Postpaid mobile and fixed broadband were the main drivers of 1.8% revenue growth to 250bn pesos, the company said in a statement, adding that fixed broadband and services América Móvil’s main source of income. And Brazil and México are still the Carlos Slim-controlled company's top markets. 

Yet, with more people staying at home and retail stores closed, sales of handsets and new activations have dropped dramatically in recent months. 

“What we’re seeing overall in the big countries is a reduction in handset sales. People aren’t getting out and buying handsets. On the postpaid side I think activations are decreasing. Revenue I think is okay. In prepaid there isn’t a big reduction,” Hajj said. 

As for regulations, the CEO said he does not approve of Ecuador’s and Peru’s new measures to prevent operators from disconnecting postpaid subscribers. 

“In other countries where the lockdowns are stronger like Ecuador and Peru and that some regulations [prevent us from] disconnecting the subscribers, post-paid subscribers, we’re seeing [people who are not paying] and we need to see … when the lockdown is finished, how many of those will pay and how many of these accounts will[be] canceled.”