MVNO Straight Talk remains the bright spot in America Movil’s U.S. business

MVNO Straight Talk gained almost half a million customers during the past year and is now nearing the 9-million-customer mark. But much of the rest of America Movil’s U.S. business remains sluggish.

Carlos Slim’s America Movil operates wireless businesses in locations throughout North and South America, and in the United States the company is the nation’s largest MVNO. America Movil’s U.S. wireless brands span the likes of TracFone, Straight Talk and SafeLink, and together they cover slightly more than 22 million U.S. customers. (Though, to be clear, America Movil does not operate its own wireless network in the United States; as an MVNO, it essentially piggybacks on networks belonging to the likes of Verizon.)

Moreover, America Movil’s U.S. business has been suffering through a period of contraction after years of growth. For example, the company counted fully 24.1 million customers a year ago, but in the intervening months the company has shed more than 2 million subscribers.

But not all of America Movil’s brands have suffered through that decline: For example, America Movil’s Straight Talk brand in the United States, which generally goes after the low-income segment with unlimited data plans at around $55 per month, has grown from 8.5 million customers a year ago to end the second quarter of this year with 8.99 million subscribers.

“At the end of June we had 22.1 million subscribers, 8.2% below the prior year with net disconnections of 635 thousand slightly lower than in 2017,” America Movil wrote in its second quarter earnings report. “We have seen an improvement in the rate of growth of subscribers, particularly StraightTalk, our main brand, that posted a 5.8% increase in subs from the year-earlier quarter; and in the case of SafeLink, disconnections brought about by the changes in the rules of the Lifeline have continued to decline at a somewhat more gradual pace.”

“In the U.S. TracFone's revenue growth turned positive again after some quarters of decline,” acknowledged Carlos José García Moreno Elizondo, the firm’s CFO, in a transcript supplied by the company of its quarterly earnings call with investors.

“America Movil’s 2Q18 results were broadly in-line with our expectations (service revenues matched DBe, and EBITDA was -0.3% vs. our estimate),” wrote the analysts from Deutsche Bank Research in a note to investors detailing America Movil’s wider corporate results. “AMX’s scale and network quality leadership is paying key dividends in top markets like Mexico and Brazil, where mobile service revenue growth was +9% and 12% respectively (smartphone uptake, mobile data growth).”