Izzi and Totalplay, two major players in Mexico's internet service market, are grappling with significant subscriber losses, reflecting challenges as they attempt to mimic the successful strategies of Telmex. During the third quarter of 2024, Izzi experienced a loss of 24,674 customers, whereas Totalplay added only 115,000 new users. This sharp decline stands in stark comparison to Telmex, which welcomed 800,000 new subscribers during the same timeframe, becoming the operator with the largest net gain of customers.
The stark differences among these companies are rooted deeply in their pricing and service strategies. Izzi and Totalplay, under the influence of Telmex's competitive pricing approach, initially adopted similar tactics: freezing price hikes and enhancing internet bandwidth. Yet, these measures have not yielded the expected results. While Francisco Valim, CEO of Izzi and Sky, previously insisted the Telmex model would not disrupt their business due to the nature of their service packages, recent performance statistics tell another story.
Telmex, which had once faced mounting pressure from subscriber losses akin to the current plight of Izzi and Totalplay, has made strategic moves to bolster its market position. A key element of its strategy involves raising capital investment aimed at network expansion. This included pouring 4.95 billion pesos ($264 million) during the third quarter of this year, marking a staggering 122% increase from the previous year’s 2.22 billion pesos. These actions have reportedly enhanced service quality, drawing customers away from its competitors.
Industry analysts have commented on the inefficacy of Izzi and Totalplay's strategies, which they believe will inevitably hurt them, especially as they are already locked in cycles of price increases at least biannually. Their concerns are underlined by the operational turbulence these companies face. Izzi is currently undergoing substantial restructuring as it merges with Sky, meant to form a new competitive entity, but this involved significant service alterations, directly affecting their customer base.
On the other hand, Totalplay is also facing challenges stemming from decreased levels of investment. This reduction, though unspecified, aims to improve liquidity and address upcoming debt repayment obligations. Unfortunately, it has reflected negatively on their growth numbers, as they struggle to keep up with the rapid advancements and improvements made by Telmex.
Meanwhile, Telmex's resurgence can be attributed not only to increased investments but also to refining its service offerings. Their decision to provide additional streaming services free of charge and their prudent management of subscription fees have made their plans particularly attractive. These strategies have proven effective, leading to impressive subscriber growth, even as competitors like Izzi and Totalplay see their numbers dwindle.
The future may hold potential improvements for Izzi and Totalplay, but the immediate picture remains grim. Both companies will need to reassess their tactics swiftly. They might find inspiration again from Telmex’s recent strategy, which eschewed price hikes for enhanced internet speeds and varied service offerings.
The market is watching closely, as it is clear; the battle for supremacy among Mexican internet service providers is as competitive as ever. If Izzi and Totalplay cannot pivot effectively and respond to the strategic gains made by Telmex, they risk falling even farther behind. The shifting sands of consumer preferences and competitive pricing may yet redefine the future of these companies, but for now, Telmex holds the crown amid significant growth.
