"Latin America's mobile operators are running out of new people to sell to, but data services -- especially from 3G launches -- will continue to propel top-line growth and handset sales," said analyst Wally Swain of the Yankee Group, a research firm.
America Movil will face competition. Other wireless firms in Latin America, including Spain's Telefonica TEF and Luxembourg-based Millicom International Cellular MICC, are upgrading to 3G networks in several countries, analysts say.
America Movil launched 3G services in Brazil and Argentina in late 2007, and in Mexico just this month.
It's aiming to upgrade wireless networks to 3G in five or so more countries this year. Its 3G services will be available mainly in big cities.
The carrier plans to sell a wide range of Internet, music and video services over 3G networks. On Feb. 12, America Movil announced a deal to provide YouTube's video clips to customers with 3G phones.
"3G will bring a real broadband Internet experience to mobile," Swain said. "It's a good way to keep business and high-end users happy."
America Movil says it will spend $4 billion on network upgrades in 2008, about the same as last year. The 3G investment will pay off, according to Carlos Garcia Moreno, America Movil's chief financial officer.
"We feel that people are going to spend a little bit more on data (services)," he said on America Movil's Feb. 6 earnings conference call with analysts.
Besides cell phone customers, America Movil will sell 3G services to laptop computer users.
That's a good strategy, says Pali Research analyst Walter Piecyk, because much of Latin America still lacks high-speed Internet connections via landline hook-ups.
"It's not about bringing iPhones (and other high-end cell phones) to Latin America," Piecyk said. "It's all about 3G data cards (for laptops). It's about the people who don't have broadband access in homes."
Based in Mexico, America Movil ended 2007 with 153.4 million wireless customers. Over the past five years, improving Latin American economies upped consumer incomes, making wireless phones more affordable. That helped drive America Movil's U.S. stock, which has risen for most of the past six years.
But wireless penetration is now high in many Latin American countries. In Argentina about 96% of the population uses a cell phone, says the Yankee Group. In Chile it's about 86%.
Wireless penetration is still below 65% in Brazil. It's a hotly contested market.
Telefonica and Portugal Telecom co-own Vivo, Brazil's biggest wireless firm. America Movil beat analyst forecasts in 2007 by adding 6.8 million customers. It ended the year with 30.2 million customers in Brazil, up 27%.
In 2007, America Movil's profit rose 32% to $5.4 billion. Company executives have warned that the U.S. economy's slowdown could slow Latin America's growth in 2008, with wireless services getting pinched.
America Movil still sees strong wireless demand in Colombia, where penetration is below 75%, and in Peru, where less than half the population has cell phones.
A key market is Mexico, which has 60% wireless penetration, and where America Movil leads with 50 million subscribers.
America Movil faces tough competition in Mexico from Telefonica, analysts say. And Mexico's regulators might open up the wireless market to new entrants.
"In more mature markets and regions, America Movil will have to explore new ways of generating revenue growth," said Raymond Yu, an analyst at market research firm Ovum.
He says demand for 3G services is still iffy.
Analysts say it's unclear if America Movil is interested in expanding outside of Latin America. It tried to buy a stake in Europe's Telecom Italia TIA last year.
America Movil's U.S. unit, TracFone, added 1.6 million customers in 2007, ending the year with 9.5 million. TracFone leases network capacity from AT&T T . America Movil is controlled by billionaire Carlos Slim.
Slim is a frugal owner, says Piecyk. America Movil waited until prices for 3G network equipment and phones fell before deciding to ramp up services, he says.