EconomyFinancialTelcel and Movistar fall, why does AT&T grow?

Telcel and Movistar fall, why does AT&T grow?

Seven years after AT&T arrived to operate in Mexico, it managed to be the only telecommunications operator with positive figures in the first quarter of this year. It recorded the largest operating flow in its history, “the highest since we arrived in Mexico,” said Mónica Aspe, CEO of AT&T Mexico, in the company’s financial report.

According to figures from the company of American origin, between January and March it obtained an operating flow of 59 million dollars, more than five times compared to the 11 million dollars reported in the same period last year and 23 million more compared to the previous year. fourth quarter of 2021.

The positive results of the telecommunications company were driven by its service revenues, which reached 490 million dollars, 11.6% more compared to the same period last year, thanks to subscriber growth, while its equipment sales were of 200 million dollars, an increase of 4.2%, compared to the same period of 2021.

These results are relevant because the other operators such as Telcel and Movistar registered drops in both segments due to factors such as inflation and the increase in the time it takes to replace smartphones . And the sale of telephones represents around 30% of the total income for telecom operators, according to the consultancy Select.

For Rolando Alamilla, market research manager for The Ciu consultancy, the company’s positive results are due to its financing scheme for its mobile service instead of the mobile device, which boosted its income in this segment, since previously it subsidized the telephone and this increased the cost of mobile services for users.

“There are fewer and fewer users who can purchase equipment and, of the three telecommunications operators, AT&T is the only one that has grown in terms of equipment. In the end, it is because of the scheme that it is handling as financing of the service and not the issue of the device”, says Alamilla.

Another factor that boosted AT&T’s results was the arrival of more users, increasing its base by 8% to total 20.5 million, which means that it already has a 15.4% market share in the country.

And this result is significant if one takes into account that the increase in the subscriber base has been one of the great challenges for the company since it arrived in the country.

According to Ernesto Piedras, director of The Ciu consultancy, when AT&T bought Nextel and Iusacell for 4.3 billion dollars, it acquired a postpaid-only user base, causing the company to focus mainly on that segment, which is very scarce in the country. However, this has helped the company to have almost 19% of the total revenues of the mobile sector in Mexico, due to the fact that its clients are of higher purchasing power.

However, the company needed to strengthen its user base to increase its market share, for which it decided to change its strategy of expanding the prepaid segment, which in the first quarter of this year rose 10.8%, while the postpaid segment had a slight increase of 0.8%.

“What has worked for AT&T is to diversify the product and begin to grow in the number of users, which in the end can be translated into terms of income,” says Alamilla.

AT&T, with greater advantage for 5G

At first, the fifth generation of networks in Mexico will be acquired by a very specific segment of the population because it is still a technology that is not very affordable and attractive to users.

However, mobile phone companies will seek to capture the attention of niche 5G users to bring them to their coffers. Alamilla believes that by having a more affluent subscriber base, AT&T is more likely to be able to add 5G consumers.

“The operators will begin to fight for that niche that can pay for those 5G plans and this is where AT&T has the advantage, because it is the one that historically has the users with the highest purchasing power and the best Average Revenue Per User (ARPU) of connectivity”, assures Alamilla.

AT&T will offer its 5G service through its Ármalo plan, with which users can customize their rental plan based on their connectivity needs.

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