América Móvil to China: stay away from Brazil

Echoing concerns expressed by rivals Vivo and TIM, Mexican telecom giant América Móvil would rather not have to compete with Chinese players in Brazil.

State-run telcos China Telecom and China Mobile expressed interested in acquiring part of Brazilian telco Oi, which is undergoing a judicial reorganization and needs fresh capital to reduce its debt and increase investment levels.

"This China business is complex. We hear about it, read about it, but they operate in a dynamic that is different from the Western world. I see it with concern," the CEO of América Móvil in Brazil, José Félix, told journalists at a company event in São Paulo on Thursday (pictured).

"I don't know what they're going to do here. In China, business and government are a little mixed. Who are we going to compete with, run against? With the Chinese government or with a company?"

The presidents of TIM, Stefano De Angelis; and Telefónica Brasil, Eduardo Navarro, had previously expressed concerns about Chinese government-funded telcos coming to Brazil with aggressive pricing plans that would bring average revenue per user down.

Another concern is having a foreign state-run player that does not need to pay dividends to shareholders.

"I am not aware of such an experience in the world. A country like China entering a telecom market as big as Brazil. I hope they don't. It will shake the local market, which is already unstable, sick. I hope they find new alternatives and solutions to Oi's problem," Félix said.

CONSOLIDATION

Félix told BNamericas that he stands by what he said at Futurecom in October, when he stated that the Brazilian telecom market needs to consolidate and have a maximum of three national players.

Return on capital in the Brazilian telecom industry is much lower than in similar markets, he added, while complaining that the local tax policy is "stupid."

2017 AND BEYOND

América Móvil Brazil reported strong growth in postpaid additions this year, especially after April, when it "stole" clients from Vivo and TIM by being the first to offer unlimited calls to any carrier, Félix said.

The Brazilian subsidiary is expected to take the lead in sales for Carlos Slim's telecom giant in the upcoming years, said Rodrigo Marques, strategy and operational management director at América Móvil Brasil. Brazilian operations currently contribute 40% of the group's revenues, nearly matching Mexico, he added.

On the mobile front, the company has focused on expanding 4.5G technology, now available in six Brazilian metropolitan regions. THe goal is to reach 11 metropolitan regions. It also plans to upgrade half of its 18,000 mobile base stations in the country; 2,000 have been upgraded so far.

América Móvil has 212,000km of fiber optic cable laid in Brazil, which it inherited from Embratel, as well as 18,000km of submarine cables in and around the country. The company also claims to have the largest number of sites connected to fiber optics, in what is known as backhaul.

For 2018, the company plans to increase the focus on the internet of things, big data and intelligent advertising.

"We remain optimistic and continue to invest in Brazil. We aim to keep our growth pace and seek market leadership in all the segments where we operate," said Félix.