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ANALYSIS SUMMARY
A few weeks ago, Spanish operator Telefonica announced it had reached 10m mobile customers in Mexico and signed a huge sponsorship contract with the Mexican Football Federation. Days later it came out with outstanding quarterly financial results. 1Q2007 performance was the best ever for Telefonica Moviles Mexico (TEMM) and also one of the highest growth periods, after Peru, among Telefonica’s subsidiaries in Latin America. Although Telcel (the Mexican brand of America Movil) has by far the strongest position, the battle between America Movil and Telefonica in Mexico is one of the most important in the continental race for the mobile market. Given that both firms are preparing 3G deployments to be launched at the end of this year in Mexico, and because of the introduction of number portability and other potential modifications in the Mexican regulatory framework, we see 2008 as a critical time to define the coming plans for Telefonica in America Movil’s home country. However even with changes in the regulatory context and with aggressive market strategies we don’t expect dramatic changes in the mobile market structure in the coming years, nor do we predict any real threats to the market leadership of America Movil.
Publication Date: June 2007
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