TORONTO – While one analyst made waves yesterday predicting the potential Canadian entry of Mexican wireless giant America Movil, another today says such a move is unlikely.
UBS Securities analyst Philip Huang was quoted in the Globe and Mail yesterday saying the company (headed by Carlos Slim, considered to be the world’s richest man) which has over 220 million customers has asked the incumbent Canadian operators what sort of arrangements can be made so that America Movil (AMX) can launch as an MVNO (mobile virtual network operator) here.
An MVNO sees a competitor basically rent space from a network owner and then come to market with its own brand, the way Virgin did initially (on Bell’s network) and Videotron launched in Quebec (using Rogers).
However, Jeff Fan, Scotia Capital’s telecom analyst (who also covers the Mexican telecom world) sees the storyline a bit differently. It was a different telecom world when Videotron launched as an MVNO in Quebec (prior to the last spectrum auction there was no way for a competitor to build a network) and Virgin was a joint venture where Bell owned half from the start – and now owns 100%.
Now, with so much competition in Canada, especially on the low-end, where AMX would target, finding an MVNO deal with room enough for the Mexican company to make decent margin would ne near impossible.
“We believe AMX’s interest in entering Canada as a MVNO is valid, but the story ends there,” Fan wrote to clients this morning. “Based on the Canadian market characteristics, we believe it would be difficult for AMX to obtain reasonable wholesale rates from the Canadian network operators to make a sufficient return.
“AMX is always exploring new market opportunities because of its significant cash flow. In the past year alone, AMX has reportedly looked at other markets such as Serbia and Poland, and likely a few others that have not been publicized. But AMX’s investment actions are typically disciplined.”
