TMCnet News
Mexico's Telmex: More computers could help profits(Associated Press Via Acquire Media NewsEdge) MEXICO CITY_Telecommunications giant Telefonos de Mexico SA said Thursday that the only way to continue its explosive growth in broadband Internet services is to get more computers into Mexican homes. Reporting an 11.9 percent drop in third-quarter net profits, Telmex Finances Director Adolfo Cerezo said the company is challenged by the fact that Mexico has fewer computers per household than many other countries. "We have reached the peak of computers that have access to Internet services," Cerezo said. "The solution or the alternative is, let's provide access to computers." In July, Telmex started offering laptops for monthly installment payments of as little as 100 pesos ($7.75) per month. The company has seen average annual growth of more than 70 percent in overall Internet services since 2003, when only 428,000 customers were connected; by the end of the third quarter, that number had grown to 9.2 million customers. But broadband service, which has been the fastest-growing sector, has leveled off to growth of about 40.5 percent annually, with 6.3 million customers. Telmex, which controls 83 percent of land lines in Mexico, also experienced declining revenue from traditional calling services in the third quarter, when Telmex actually disconnected more land lines than it connected. "The worldwide trend toward fewer fixed 'lines in service' is also evident in Mexico," said Telmex CEO and Mexican billionaire Hector Slim. He said "lines in service" declined by 69,000 in the quarter as compared with the same period of 2008. "The main factors are competition from cellular telephones and others, and the economic situation, which has affected our customers' payment capacity and as a consequence, the number of disconnections surpassed connections," Slim said in a conference call. The struggling economy also has affected international long-distance traffic _ which fell to 1.9 billion minutes in the quarter, a 16 percent drop from the same period in 2008 _ in part due to a 34 percent drop in outgoing calls from Mexico. "The economic conditions have affected the purchasing ability of our customers; we don't have any doubt about that," Cerezo said. But the company's own push to sell packaged services and broadband have also helped reduce the amount of time customers spend on traditional calls. "Our own efforts to encourage broadband use while facing tougher competition and economic conditions, once again combined to slow the pace of our traditional voice business," Cerezo said. Even local calling traffic was down 6.4 percent for the quarter, a drop Telmex attributed not only to cell phone competition but also competition from local telephone providers and pay TV operators who have entered the business. Telmex criticized federal legal restrictions that ban the company from offering "triple play," a service that bundles television, phone service and Internet access. "The regulators continue to drag their feet," Cerezo said. "Their lack of flexibility denies the proven advantage of convergence to the Mexican people, it discourages Telmex growth and investment and hurts Mexican national development. This is a lose-lose situation." In its third-quarter earnings report released Wednesday, Telmex reported net income of 4.79 billion pesos ($354 million), compared to 5.43 billion pesos in the third quarter of 2008. The company said revenue was 29.5 billion pesos, a 5 percent drop from 31 billion pesos in the year-earlier period. Telmex shares fell 1.1 percent to close at 11.34 pesos Wednesday before the report was released. (c) 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. |