EconomyFinancialWhy Telmex decreased its investment by 61.8% in two...

Why Telmex decreased its investment by 61.8% in two years

Telmex, a subsidiary company of América Móvil, has drastically reduced its investment in Mexico in the last two years. According to data from Carlos Slim’s company, as of the second quarter of 2020, the injection of capital to expand and improve its network went from 4,619 million pesos to 1,761 million pesos, less than half of what it spent during the year when the pandemic started.

In the first half of the year, the company serves 21,256,000 users, of which 10,121,000 are Internet users and 11,135,000 fixed lines.

The analysts consulted agree that Telmex’s reduction in investment for its network is due to a lack of incentives that the company has had since 2015, the year after the Federal Telecommunications Institute (IFT) declared América Móvil as preponderant and had to divide their companies (Telmex-Telcel).

“América Móvil was the company that invested the most, but since it did not have a stimulus and the obligation to share its infrastructure with its competitors, its investment (in the fixed segment) fell,” says Jorge Fernando Negrete, telecommunications analyst and president of the Digital Policy Law consultant.

Telmex’s investment stimulus is its entry into pay television, but its concession title prevents it. In January of this year, the company assured that if the IFT allowed it to offer this service, it would invest 8,000 million pesos. However, the telecommunications regulatory body again denied the concession.

Another factor, Negrete points out, that is associated with the decline in Telmex’s capital injection is the Telephone Operators’ Union of the Mexican Republic. As of the second of 2022, the company reported that it has 39,971 retirees to whom it paid pensions and antiquities for 10,722 million pesos, while a year earlier it paid, for both concepts, 30,419 million pesos, which, in the opinion of the specialist This means that the company cannot allocate more resources for its infrastructure.

Telmex and union workers are still discussing the options to reach an agreement on the issue of labor liability, unfilled vacancies and the future pension scheme.

In pandemic capital injection rises

In 2020, a year marked by the pandemic, operators that offer fixed services such as the internet injected more capital to expand their network due to the fact that all work, educational and entertainment activities were completely turned over to homes, which translated into increased demand for their services.

Telmex, which in 2020 had 44.7% of the market share in the fixed segment, injected more capital to improve and increase its network. And it is that in the second quarter of 2020 it disbursed 4,619 pesos, 38.1% more than the 3,344.2 million pesos in the second quarter of 2019. But a year later, Carlos Slim’s subsidiary company lowered its investment by 46.3%.

“In the pandemic, the company invested a lot and it may be that due to the robustness of its investment it may have decreased the following year. But the reality is that there is contention on the part of the company. It prefers to invest more towards mobile networks than fixed ones, although in the end it is complementary”, assures Carlos Hernández, an analyst at The Ciu consulting firm.

América Móvil is currently deploying infrastructure for the development of 5G in the country. Only for this year, the company assured that it will invest 1,800 million dollars. As of the second quarter, it has brought this technology to 40 cities in the country with 56 million people, which represents an advance of 22 cities compared to the 18 with which it began in February of this year.

For analysts, the fact that América Móvil allocates more income to one company than another translates into negative effects for users and for the increase in infrastructure, especially to reach areas where there is currently no operator.

According to data from the IFT’s first quarterly report of 2022, the internet service concentrates 55.3 percent of the total nonconformities of connectivity services, where Telmex received more complaints by reporting 2 thousand 164, Megacable with 788, and in third place Izzi with 597 claims.

“The decrease in the Telmex network affects from the perspective of the leap towards a new technology such as 5G and at the same time to high-speed networks, having poor service and less coverage in rural areas,” says the expert. from the consulting firm The Ciu.

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