The Business Year

Carlos Morales

MEXICO - Telecoms & IT

Uneven split in Mexico telecoms market

Country Manager, Telefonica


Carlos Morales Paulí­n is a Civil Engineer from Universidad de la Salle in Mexico, with an MBA from the Tepper School of business at Carnegie Mellon University, and a degree from the Advanced Management Program at Harvard University. With 13 years’ experience at Grupo Telefonica, Carlos has held several management positions in Spain, Brazil, and Mexico in business development, marketing, sales, operations, and digital business. He was vice-president of consumer relations and operations in Brazil, and global head of M2M-IOT (Machine-to-machine – Internet of Things) in Spain. Before joining Telefonica, Carlos worked as a consultant at McKinsey & Company. He is currently executive president and CEO of Telefonica Mexico.

“There are 120 million people in this country and only three operators.“

What is Telefonica’s current position in the market and what are the biggest challenges and opportunities that you see?

Typically in most countries Telefonica has been the incumbent, the former monopoly that competes against new challengers. In Mexico, we are different in the sense that we are the challenger. The company has solid foundations and its staff is extremely committed to the company. We also have a solid network and are in 93,000 cities and towns in Mexico, covering more than 90% of the population. Telefonica has been innovative in providing different services in the last few years. We were the first to not charge customers by the minute, but by the second. We place our clients first, and got rid of international roaming fees and provided unlimited voice minutes. Later, the competition imitated our offers, which subsequently benefited their own clients.

With over 20% of the market share and 15 years in the market, is Telefonica still the challenger in Mexico or is it now a large, established player?

We are still in an offensive mindset in various ways. There is a huge market in Mexico and this presents a great opportunity for Telefonica Mexico. There are 120 million people in this country and only three operators. Furthermore, Mexico has a large number of young people. They love social networks and connectivity and this presents a great opportunity. In Mexico, we are behind other Latin American countries in terms of penetration of mobile services; there is still a great deal of ways to go in terms of extending the penetration of mobile services here. Finally, Mexico is economically stable. Despite the issues with the US, we will still grow by 1.5%. Furthermore, in addition to the opportunities in mobile services, we will see a new wave of growth in the market, namely the Internet of Things (IoT). That is still nascent in the Mexican market and the world in general. It will bring us millions more connections in the future. Mexico is a great country for a telecoms company and we need the appetite and hunger to capture that opportunity. Even though we have 24% of the market and 15% of market revenues, our ambitions are greater. There is a player here with 65% of market share, which is a large figure.

What does a company need to do to be able to respond quickly?

One of the most important moments in our market is the Christmas campaign. In the 2015 Christmas campaign, we had our entire campaign ready in the final days of November and suddenly AT&T launched an aggressive campaign in prices. Two years ago, it would take us about one or two months to change our campaign; now we have shortened that to 10 days. Another example has to do with execution and being agile; it is typical for a large company to make a decision at the board meeting and two months later little has been done. We now work in a system in which we select our key priorities and the main initiatives that support those main priorities. We appoint leaders for each initiative for a team and follow up on the progress of each project every week.

Where do you envision Telefonica being positioned in Mexico?

It is hard to have an exact definition of a number that defines where we want to be. We are currently living in a digital revolution. Telefonica firmly believes this revolution will bring great things to the world and will help people live better lives. This is our place in the world because we provide connectivity. All these great things happen because connectivity exists and we are the ones that create networks that users can purchase and interact with. We want Telefonica Mexico to continue to improve the lives of the Mexicans. We have three priorities for this company in the next few years. We want to continue to grow at a solid pace in the market. We are proud of our 27 million clients and want to increase that number, even with the entrance of AT&T. We continue to win market share and have certain businesses where we are growing by double digits, such as post-pay. Our digital services business is mainly in B2B. Many believe we only have products for consumers; however, we also have many products for SMEs and for large corporations and the government. This B2B sector is growing by double digits, and includes cloud services, security services, and IoT. This is a priority for us: accelerated growth in businesses with more value. Our second priority is to continue transforming the company as a digital company, with more digital processes. We are proud today that over 90% of all customer calls are attended to automatically. The third priority is having an offensive mentality. We are digitalizing our company and transforming it into a more efficient one. Another example that contributes to our agility is that every year we reduce our headcount. We are proud to manage 27 million customers with 2,000 colleagues.

What sets Telefonica apart from the other telco providers in the market?

There are different aspects that companies and governments should consider when working with us. Our network and services are robust and are only getting better. We do everything it takes to serve our clients better. We signed an agreement with Telcel under which it will provide us network services in places where we do not have a network. In terms of products and prices, Movistar has one of the best competitive prices in the market. However, customers pick us as their provider because we have the best customer service in the market; in Mexico Telefonica has the best customer satisfaction in the market. We also have the lowest number of consumer complaints in the market. We have to provide the best of the world in terms of network, a competitive suite of products, and the best customer service is what has to take customers and these people to work with us.



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