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Brazil poised to replace Mexico as América Móvil’s most important market

RIO DE JANEIRO, BRAZIL – Brazil could become the most important market for Mexico’s América Móvil after the company acquired part of Oi’s mobile business, which would replace Mexico as the dominant player in that part of the market.

América Móvil is the 7th largest mobile network operator in terms of subscribers, one of the largest corporations in the world, and the leading telecommunications company in Latin America.

The acquisition of Oi will add 12 million subscribers to Claro’s subsidiary in Brazil. Five million of them have prepaid plans. Daniel Hajj, chief executive of America Movil, the remaining seven million are postpaid customers, said at a conference with analysts and investors on April 27.

Brazil poised to replace Mexico as América Móvil's most important market. (Photo internet reproduction)
Brazil poised to replace Mexico as América Móvil’s most important market. (Photo internet reproduction)

“We have been working on preparing our network, and we are ready to add all these customers, and of course, we will have excellent synergies,” Daniel Hajj said.

Oi’s 12 million mobile subscribers are in addition to the 71.8 million mobile subscribers América Móvil already has in Brazil, according to figures from the end of March, bringing the total number of mobile subscribers to 83.4 million.

The number of mobile subscribers in Brazil would surpass the 80.9 million mobile subscribers América Móvil had in Mexico at the end of the first quarter of 2022.

América Móvil, which completed the acquisition at the end of April, has six months to integrate the new users in Brazil into its network and one year to integrate them into its information systems.

If mobile subscriber numbers in Mexico, where the company is considered a leader by market regulators, do not change significantly in the coming months, Brazil would become the most important mobile market for the Mexican company.

In Mexico, the number of mobile users increased by 0.6% quarter-on-quarter in the first quarter of 2022 and by 1.8% in Brazil.

The second-largest economy in the Americas after the U.S. is already the main source of customers for the company’s fixed-line business, with 24.9 million customers as of March 31, compared with 21.3 million in Mexico.

The Oi assets acquired by América Móvil represent annual revenues of R$2 billion, or about US$397 million, of which Hajj said at the conference he expects 70-75% to be converted into operating cash flow.

“The positive impact on the company’s margins will have to be evaluated over the course of the quarters,” Brian Rodriguez, an analyst at Monex, told Bloomberg Linea about the deal.

Claro, the company’s Mexican subsidiary, said it paid R$3.572 billion (US$772 million) for the deal, which also involved rivals Telefonica Brasil and TIM as buyers.

In recent years, the Mexican company has strengthened its presence in the Brazilian market through acquisitions. At the end of 2019, it completed the purchase of Nextel Telecomunicações in a deal worth just over US$900 million.

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