From wireless to integrated telecommunications in Latin America: A market-based analysis of America Movil

Enabled by technological change, telecommunications service providers have entered a new era in which integrated telecommunications services, particularly data and video offerings, will be their principal growth drivers. In order to provide these services to their subscribers, often in multiple play bundles, the two principal telecommunications operators in Latin America, America Movil and Telefonica are migrating to converged fixed line and mobile platforms supported by high-speed optical networks. Organizational convergence, internal in Telefonica´s case, through merger with Telmex Internacional and Telmex in America Movil´s, has accompanied technological convergence. This paper investigates why America Movil, primarily a wireless company before its reorganization in 2010, decided to change its strategic direction. The paper also analyzes the impact that America Movil´s reorganization has on the attractiveness of the company´s Latin American business portfolio compared with Telefonica´s, and on its competitive position. The degree of market attractiveness and competitive strength possessed by the portfolios, as well as the portfolios´ market variability, are considered. The multidimensional portfolio analysis technique employed in the paper may have wider applicability for formulating corporate strategy.