MEXICO CITY, Jan 21, 2003 (El Universal/Corporate Mexico by Internet Securities, Inc. via COMTEX) -- The decrease in the per-minute price of pre-pay phone cards used by Telcel to avoid the special products and service tax of 10% will not cause negative effects on its margins, analysts say. Nevertheless, they warn this measure could be costly for the competition, because in having to follow the leader, they will suffer an impact on their already weak financials. The analysts say that Telcel's financial strength allows it to offer these prices. Pre-pay cards used to cost 5 pesos per minute, but the cost is now down to 2.90 pesos per minute on 240-peso cards. Jorge Lagunas, telecom analyst at Interacciones, said that Telcel's reduction in rates was very aggressive, but that its finances could stand it if the company keeps its growth margin and efficiency in collecting.Telcel sacrificed 31% of its earnings with this measure to keep the consumer from paying the 10% telecommunications tax, betting on growth through volume instead of price.Lagunas said Iusacell does not have the margin to sacrifice even one peso on its rates "because that would speed up its bankruptcy if it does not receive an injection of capital."
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