Tags: telecom | mexico | movil | telmex | slim

Mexico's Slim Seeks to Rebuild Telecom Empire

Monday, 01 August 2011 05:54 PM

Carlos Slim, who split his Mexican telephone empire in 2001, is putting it back together.

Slim’s America Movil SAB, Latin America’s largest wireless carrier, offered about $6.5 billion to buy the 40.4 percent of Telefonos de Mexico SAB it doesn’t already own, giving it full control of its former parent. America Movil will pay 10.50 pesos (90 cents) a share for Telmex, the nation’s largest fixed-line phone carrier, according to a filing Monday.

While taking over Telmex will cut administrative costs such as accounting, America Movil will be increasing its exposure to a fixed-line business that is losing clients to competitors. Those rivals include America Movil itself, as more Mexicans stop using land lines in favor of mobile phones.

“Arguably, America Movil investors shouldn’t be thrilled with the idea of owning more of a slower-growing, if not declining, asset,” said Christopher King, an analyst at Stifel Nicolaus & Co. in Baltimore who advises holding America Movil shares. “The only advantage to doing this is really to the extent they can eliminate corporate overhead.”

Telmex surged 73 centavos, or 7.7 percent, to 10.22 pesos at 4 p.m. New York time in Mexico City trading. America Movil, based in Mexico City, dropped 29 centavos, or 1.9 percent, to 14.83 pesos.

The offer of 10.50 pesos a share represented an 11 percent premium over Telmex’s closing price yesterday of 9.49 pesos.

Grupo Televisa Competition

Taking control of Telmex would allow America Movil to more fully integrate its telecommunications infrastructure in Mexico -- offering mobile, fixed-line and Internet service. That would help it compete against Grupo Televisa SA, the cable carrier that’s offering phone, Internet and TV service and is entering the mobile-phone market.

Slim, 71, bought control of Telmex from Mexico’s government in a 1990 privatization sale. The phone company spun off its wireless unit to form America Movil in 2001.

America Movil acquired its 59.6 percent stake in Telmex last year in a $23 billion transaction that also gave it full ownership of Slim’s fixed-line networks in South America.

That transaction was approved by Mexico’s antitrust agency, which suggests America Movil is likely to get approval for the new Telmex offer, King said.

America Movil and Telmex have faced a series of blows this year from Mexican regulators, including a $1 billion fine from the antitrust agency for America Movil’s alleged anti- competitive practices in the market for the mobile-phone fees charged to rivals. America Movil is appealing that ruling, as well as the telecommunications regulator’s decisions to cut interconnection fees charged to competitors.

America Movil represents about 59 percent of Slim’s $70 billion in publicly disclosed holdings, according to Bloomberg data. In addition to the America Movil stake, Slim and his family have individual holdings in Telmex worth about $245 million. Slim also controls banking, mining, real-estate and retail companies in Mexico.

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Carlos Slim, who split his Mexican telephone empire in 2001, is putting it back together.Slim s America Movil SAB, Latin America s largest wireless carrier, offered about $6.5 billion to buy the 40.4 percent of Telefonos de Mexico SAB it doesn t already own, giving it full...
Monday, 01 August 2011 05:54 PM
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