Low cell phone sales and blocking of devices: Telcel’s Achilles heel?

“We used to have 5G phones that cost $300 or $400, and today we have 5G phones that cost $200. So people are buying cheaper phones that still have good cameras and chips,” the executive explained in a conference call with analysts.

One of the strategies that Telcel has promoted to reverse the negative trend in phone sales has been the Amigo Paguitos program, in which prepaid users – a segment that represents 82.2% of the subscriber base – can purchase a device at prices from 2,000 pesos to 7,000 pesos, without the need for a credit card. The program was also made available to postpaid users.

But this type of strategy would be a factor that is causing Telcel to see its sales in the area of ​​handset sales decline. Rolando Alamilla, market research manager for the consulting firm The Ciu, explained that while selling phones through weekly payments is a good strategy, the only drawback it brings with it is acquiring users who buy low-end handsets.

“When purchasing and renewing devices, users pay a lot of attention to the monthly or biweekly fee they must pay, and Telcel offers this flexibility in exchange for more affordable terminals,” says the analyst.

Terminal blocking, the other problem

Locking of devices is another variable that is taking its toll on Telcel. The company is one of the operators that still sells locked devices and users no longer want to be tied to a single company, which has been exacerbated by the arrival of the Virtual Mobile Operators, which have generated greater curiosity to know more services. “Telcel is being a victim of its own anti-competitive practices,” warns Rolando Alamilla.

Among the regulatory measures imposed on América Móvil and its subsidiaries such as Telcel by the Federal Telecommunications Institute (IFT) is to prevent the blocking of telephone equipment.

Blocking devices involves companies putting a lock on cell phones so that they can change telephone companies, and it has become one of the most common complaints from users. According to data from the IFT, in the first quarter of this year, the regulator’s Soy Usuario platform reported 183 complaints about this practice, which means an increase of 8.2% compared to the same period last year.

Department stores

The pandemic has brought about major changes in consumer habits. One of them is that users prefer to buy cell phone equipment in installments without interest or with discounts, through e-commerce channels and in department stores.

According to information from the Mexican Online Sales Association (AMVO), the purchase of mobile devices has positioned itself among the most consumed items in digital channels, even during promotions such as Buen Fin or Hot Sale.

The analyst consulted by this newspaper said that department stores and e-commerce have been attracting high-spending users who are looking to buy high-end and mid-range phones for the past four years, thanks to the promotions to pay off the equipment.

These stores have been joined by manufacturers such as Samsung, Motorola, and Xiaomi, which have their own physical stores and offer users high-end equipment with the possibility of financing for up to 24 months.

“I think that some of the strategic decisions that Telcel has made have come too late. The user profile has already changed, where before the pandemic, 6 out of 10 were sold by a distributor like Telcel and today it is 4 out of 10 and it will be difficult to resume this dynamic,” warned Alamilla.