Telefonos de Mexico (NYSE: TMX) took a 32 percent net profit hit in Q4, a factor it attributes to lower revenue and higher taxes.
During the quarter, Telmex reported net profit of 3.39 billion pesos ($275 million), down from 4.99 billion pesos in Q4 2009. At the same time, the service provider had to deal with a 70 percent increase in its tax bill.
Even though Mexican tycoon Carlos Slim was able to create a powerhouse wireless/wireline provider when he consolidated his telecom holdings under the America Movil umbrella, Telmex has to deal with growing set of powerful cable operators offering triple play (voice, video and data) bundles, not to mention wireless voice substitution.
One obvious hole in Telmex's service set is video. Fearing Telmex would drive out competition, Mexico's telecom regulator has not allowed the telco to offer a video service, which it could potentially carry over the broadband network it's upgrading to deliver higher broadband speeds.
Similar to other traditional wireline telcos, Telmex saw inevitable losses in wireline voice, while wireline broadband rose. Telmex lost 291,000 wireline voice subscribers in Q4 2010, bringing its total line count to 15.59 million as of the end of 2010, but it added 835,000 new broadband subscribers. Still, the broadband rise was not enough to offset data service revenues due to "revenues from a significant security and information technologies project were recognized in the fourth quarter of 2009."
- Reuters has this article
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