Teléfonos de México S.A.B. de C.V. (NYSE: TMX), better known as Telmex, is a Mexican telecommunications company that provides telecommunication products and services in Mexico and in many parts of Latin America, such as Argentina, Brazil, Chile, Colombia, Ecuador, Peru and even in the United States. In addition to traditional fixed-line telephone service, Telmex also offers Internet access, data, hosted services and IPTV.
History
Telmex was founded in 1947 when a group of Mexican investors bought Swedish Ericsson's Mexican branch. In 1950 the same investors bought the Mexican branch of the ITT Corporation thus becoming the only telephone provider in the country. In 1972 the Mexican government bought the company, turning it into a government monopoly. From 1972 to until its privatization in 1990, Telmex invested little in the country's infrastructure. As a result, it was all but impossible to procure a phone line to one's home.
In 1990, president Carlos Salinas de Gortari decided to sell many state owned companies, with a view towards improving infrastructure and services. Telmex was sold to a group of investors formed principally by Carlos Slim, France Télécom, & Southwestern Bell Corporation, whose tender was the largest. However, controversially, the payment itself took place over the course of the next several years, using money earned by the phone service.
After privatization, Telmex began investing in new modern infrastructure, creating a nationwide fiber optic network, thus offering service to most of the country.
In 1991, the Mexican government sold its remaining stock in Telmex.
Although Telmex is now a private company it stills remains as a quasi-monopoly. There are few other telephone companies in Mexico, Alestra (formerly AT&T, Axtel, Maxcom, Megacable and Cablecom. Telmex is the 2nd most complained-about provider in PROFECO (Mexico's Consumer Commission).
Telmex Cellphone Mobile Unit
In the 1990s mobile telephones were becoming popular among the general population. The early market leader was Iusacell, and Telmex had no presence in the market. This prompted Telmex to form a subsidiary to provide mobile communications. The subsidiary was Radio Móvil Dipsa, and offered service under the brand Telcel. Telcel started out in a distant second place in its mobile market, but in 1995 everything changed, when the Mexican Currency Crisis hit many Mexicans hard. Iusacell decided to stay with rich customers, offering expensive plans, whereas Telcel began to offer the first prepaid mobile phone plans. Although, in effect, just as expensive as the contracts offered by Iusacell, the success of its prepaid plans ultimately provided Telcel the growth needed to become the leader in the mobile market within two years.
In 2000, Telmex spun off their mobile unit, creating América Móvil, which controls Radio Móvil Dipsa and would be free to develop as its own business as an independent entity. It started with 80% of the mobile market. Many people incorrectly continue to believe that América Móvil is part of Telmex. Instead, both are sister companies under parent Carso Global Telecom. Carso Global Telecom is itself a sister conglomerate of Grupo Carso.
Internet
In the mid-1990s Telmex began providing Internet access as an Internet Service Provider with the brand Uninet. A year later, they changed the brand to Telmex Internet Directo Personal (Telmex Direct Personal Internet). In 1996, Telmex' owner, Carlos Slim, bought Prodigy Communications and took the brand to Mexico, renaming the service Prodigy Internet de Telmex. Thanks to their national coverage, Telmex rapidly became the leading national ISP. As of 2005, Telmex holds more than 80% of the market as ISP, and is also the leader in broadband access with its brand Prodigy Infinitum (ADSL).
In 2001, Telmex sold the U.S. branch Prodigy Communications to SBC, which was dubbed SBC Prodigy. However, Telmex continues to own and operate Prodigy in Mexico.
In 2004 Telmex claimed that the number of users of Prodigy Internet grew by 190%.
In 2008 Telmex started to offer IPTV (TV via IP Protocol).
Long Distance Competition
In the mid 1990s, AT&T and WorldCom (MCI), among others, began operating in Mexico, representing for the first time serious competition to Telmex. However, due to Telmex's incumbent monopoly position and well-developed infrastructure and coverage, none of them were believed to pose much threat to Telmex.
Expansion
After spinning off América Móvil, Telmex started an expansion plan, which started with the purchase of Guatemala's Telgua. Later, Telmex bought former state owned phone companies in Central America, and began operations in the USA with Telmex USA.
In 2004, Telmex went into a shopping spree for undervalued operators in South America, including the purchase of AT&T's Latin American operations, giving it presence in Colombia, Peru, Chile, Argentina, Brazil, and Uruguay, and increased reach in the United States. In the same year, Telmex bought from MCI Brazil's largest and most important long distance operator, Embratel, acquired Chile's Chilesat, took control of Argentina's Techtel (operating in Argentina and Uruguay), of which it already owned 60%, by purchasing the remaining 40% from the Techint group, and purchased Argentina's Metrored. In the USA, Telmex bought 13.4% of bankrupt MCI.
At the same time, sister company America Movil pursued a similar strategy by acquiring cellular operators CTI Movil in Argentina and Uruguay, Claro in Brasil and Perú, Porta in Ecuador and Comcel in Colombia.
In 2005, Telmex sold its holdings in MCI to Verizon.
As of January 2006, Telmex continues buying assets in Latin America and in the USA.
As of March 2006, there were rumors of Telmex was buying Verizon operations in Puerto Rico, Venezuela and the Dominican Republic. The reports said that the operation can include the wireless operation on each market. The total amount of this sell is estimated nearly $300 usd millions. In January 2007 America Movil bought the Verizon operations in Puerto Rico, and days later Telmex and America Movil announced that their equally-owned joint venture had agreed with Verizon Communications Inc. (“Verizon”) to terminate the joint venture’s agreement to acquire Verizon’s indirect equity interests in Compañía Anónima Nacional Teléfonos de Venezuela (CANTV); subsequently, all of Verizon's holdings in CANTV were acquired in May 2007 by the Venezuelan government, reaching 86.2% of its total shares.
In December 2006 Telmex announces agreement to acquire TV CABLE and CABLE PACIFICO in Colombia. TV Cable offers cable TV , Internet and Voice over IP services and has been in operation for 20 years. Currently, the company serves 164,000 homes in Bogotá and Cali. Cable Pacifico serves 9 States and its main operation is in Medellín. To date, Cable Pacifico has approximately 100,000 subscribers.
In January 2007, Telmex launched Prodigy Media, the first step to offer triple play services to the Mexican market. Days later Telmex started the first Wi-Max network in Chile offering local, long distance and internet services to the 98% of the Chilean population.
In March 2007, Telmex bought Ecutel in Ecuador a small telecommunications company that offers services to the Corporate market.
In April 2007, Telmex announces agreement to acquire CABLECENTRO and SATELCARIBE in Colombia. CABLECENTRO offers cable TV and Internet access services and has been in operation for 7 years. Currently, the company operates in more than 50 cities in Colombia including Bogota, Cucuta, Bucaramanga, Ibague and Neiva, among others. SATELCARIBE offers cable TV and Internet access services and has been in operation for 7 years. Currently, the company operates in more than 15 cities in Colombia including Cartagena, Santa Marta, Valledupar, Sincelejo and Monteria.
Telmex also owns 3.41% of Portugal Telecom.
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