EconomyFinancialInflation and a lower exchange of telephones affect telephone...

Inflation and a lower exchange of telephones affect telephone revenues

The pandemic brought with it changes in the consumption habits of users, a trend from which the telecommunications sector is not spared. Telephone operators such as Telcel and Telefónica already suffer from it in their equipment revenues, which in the first quarter of this year totaled 73,836 million pesos, a drop of 10.2% compared to the same period of the previous year.

In a disaggregated manner, Carlos Slim’s company was the one that had the greatest decrease in this item, reporting a drop of 13.7%, followed by Telefónica with a drop of 6.2%, while AT&T was the only mobile operator that registered an increase, of 2.6%.

Specialists in the sector explain that the decrease in sales per device is due to several factors, ranging from the increase in the period of replacement of smartphones to inflation and the change in the acquisition of cell phones through other channels.

Ernesto Piedras, director and analyst at The Ciu consultancy, considers that although there is still a shortage of telephone equipment due to the shortage of semiconductors, this no longer represents a great loss for the operators; however, what is affecting the sale of equipment is the increase in temporality in the replacement of smartphones that consumers are having.

Before the pandemic, users renewed their telephone equipment every 18 months on average, but with the changes in habits that the health crisis triggered, it now takes 27 months to change their smartphones .

“I think there is a double effect in the drop in equipment sales, although it is not necessarily being so negative because users are making a big budgetary effort to acquire a better quality smartphone , but by investing more than double what we did three years ago for the acquisition of these smartphones what we do is prolong the possession of the current ones”, details Piedras.

Inflation is another factor affecting telecommunications operators’ equipment revenues. Erick de la Cruz, manager of analysis at the consulting firm Select, comments that the economic pressure currently experienced by Mexicans means that they have to be more cautious in their spending and prioritize the purchase of basic necessities over a smartphone .

“The low economy together with a replacement maturity cycle have affected (the revenue per device segment), but (the purchase of smartphones ) is expected to normalize by the end of the year,” De la Cruz said.

Equipment revenues are one of the most relevant segments for the operation of telecommunications companies, representing a third of their total sales.

change shopping channel

Another of the changes in user consumption habits is the way of acquiring a device. Before the pandemic, consumers bought their equipment at the telephone companies’ sales centers, but now they do so online.

According to the study of the Mexican Association of Online Sales (AMVO), “Study of online sales The Mexican digital consumer 2022”, last year the products most purchased by users through e-commerce were electronic, with 55% , in which cell phones and telecommunications services such as recharges and telephone plans are located, with 71%.

Teo Piedras, an analyst at The Ciu consulting firm, assures that department stores have also become another cell phone purchase channel for users.

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Equipment revenues totaled 73,836 million pesos in the first quarter of this year, 10.2% less than in the same period of 2021; Telcel and Telefónica were the most affected companies.