[ANDREA QUINTANILLA] 1

Telcel Position Analysis

Telcel is the most important telecommunications company of Mexico. On 2014,

Telcel recorded 168754.6 millions of pesos revenue. [1]
For many years, Telcel have been the leader in telecommunications in Mexico, but
now, thanks to the telecommunication's reform, customers are considering many
companies like Movistar, Iusacell and Nextel.

Years ago, those companies didn't mean anything compared to the monster that
Telcel was, but recently because of the anger of the people by high tariffs and
abuses, the number of customer in Telcel has decreased significantly [2].

Nowadays, Telcel has much competition and it most important enemy is Movistar
that is a relatively young company. Movistar was founded on July 25, 1995 in
España, but in Mexico, Movistar started on 2000.
Its start was very difficult because of the monopoly established by Telcel, but
through the years, Movistar has known how to stay in the market. Data taken on
March, 2015 shows that Movistar has the 25% of customers in Mexico only below
of Telcel, and thanks to the new offers and phone plans their number of users is
increasing.

By its side, Iusacell is a big company was founded on March, 2007 in Mexico, and
although it hasn't had a big success, it represent a portion of Telcel competition.
In 2014, AT&T bought Iusacell and Nextel, so those both companies will be part of
AT&T at the end of 2016. In 2014, Iusacell had the 8.7% of telephony customers,
a very small number of the market.

On the other hand, Nextel arrived to Mexico in 1998, and in 2010 it was considered
as a "Super Firm" and was included in the "Top 10 telecom operators in Latin
America" list. In 2014, Nextel counted with the 2.7% of customers of its field.
Andrea Quintanilla

Those small percentages in the market presence in Mexico are the cause of the
fusion with the great monster company that is AT&T.

AT&T started its functions in Mexico in 2007, and thanks to its fusion previously
mentioned, this big company seems to be a great competitor of Telcel. Since
telecommunications reform AT&T has made its way to success.
In ten years, AT&T expects to achieve a leadership in the Mexican mobile market.
According to analysts , AT & T, with the purchase of Nextel and Iusacell , total is of
11.4 million users ; However , last August, Thaddeus Arroyo , CEO of AT & T in
Mexico , said that contrary to these estimates the firm started with 8 million active
customers [3].
Phone plans to expand its network to more than 100 million people and launch the
first service area in North America , which cover more than 400 million consumers
and businesses in Mexico and the United States.

In conclusion, Telcel has been the leader company in Mexico for years, but that
doesn't mean that Telcel will be on the top forever the clearest example can be
seen in new proposals that emerge today, some companies seeking to break into
markets that are, like in this case under the monopolies.

Now, we can ask us many questions like what are the needs of Mexican market?
Well, Mexicans likes to be fashionable and we can see people who have very
modest jobs with the newest cellphones. So where do people buy their cellphones?

Statistics shows that although nowadays we can choose among many companies,
people still preferring Telcel. However, Telcel is missing their customers.

Here we have some numbers:

USERS users lost or gained

TELCEL 75 millions 2 millions lost

MOVISTAR 24.3 millions 2.2 millions gained
IUSACEL 8.2 millions 2 millions gained
 [ANDREA QUINTANILLA] 3

We can see that customers are changing their mind and also their cell company.
these number are hard as it means a great loss for Telcel and the loss of customer
is growing.

Some factors are affecting telcel nowadays, the most important of those factors is
that telcel had very unfair prices. Another factor are the new companies that are
offering a good service for a low price.
For that reason, telcel has been decreasing its number of customer. One of the
strategies that Telcel has implemented to stop its loss of clients is to give to its
customers a free year of Claro Video. Claro Video is a program like Netflix.
Another strategy that Telcel applied was to launch the same kind of cellphone
plans that Movistar launched. Unfortunately, Telcel has created one of the worst
reputation and because of that, is very difficult to its customers to trust in the firm
again because new companies are giving, after years, a good service for a fair
price.

The same way, Telcel always has had a bad service, many customers have
complained because of thefts carried by telcel. Customers said that in many times,
Telcel had cashed more than the customer consumption made and when the client
when the customer went to complain, the wait for a resolution was endless.
Andrea Quintanilla

Lets examine the SWOT analysis

Strenghts
Telcel is a big firm
that has many years
Weaknesses
of experience and the
The loss of trust of its
capability of recover
costumers
its clients by the
implemetation of
strategies.

Oportunities
Threats
The years of
All the new and old
experience and the
companies that are
fidelity of their
being a new options
employees and the
for clients
work environment.
 [ANDREA QUINTANILLA] 5

Now, we present the five forces analysis:

Threat of new Bargaining Rivarly among Threat of Bargaining

entrants. power of competitors substitutes power of
It is one of the buyers Rivarly is As we said, the supplier
biggest threats This is very always present more ideas
To avoid the
because of the important while Telcel Telcel have,
loss of
competition of because the launches a new the more
costumers,
companies like offers have to innovating idea threat of
Telcel make
Movistar and like to for their subsitutes
business with
coming soon costumers. costumers, the because
companies like
AT&T Costumers competition competition is
Apple to have
always have to launches the a war without
more variety
be same idea and end.
of product.
comfortable. with a better
prices.

In conclusion, Telcel have so much work to do to recover its clients, so the

companie has to start many strategies to count with its custuomer's trust again.

References:

1. Telcel’s annual report 2014

2. http://www.rcrwireless.com/20150611/carriers/latam-wrap-telcel-loses-
subscribers-in-q3-2014
3. http://eleconomista.com.mx/industrias/2015/10/07/att-busca-cobertura-100-
millones-mexicanos-2018