Wednesday - Aug 23, 2017

Carlos Slim takes the first steps in disassembling his América Móvil telecoms empire

Carlos Slim takes the first steps in disassembling his América Móvil telecoms empire

Mexican business magnate Carlos Slim is reported to be in the early stages of selling off a considerable part of América Móvil, the country’s leading fixed-line and mobile service provider.

According to a recent statement, América Móvil reported that they would be selling off sufficient assets to bring the company’s holdings below the required 50 per cent market share threshold, which would prevent it from falling into the category as the dominant group in the market, making it subject to a number of burdensome new legislations, as part of Mexico’s recent telecoms shake-up.

In the event that América Móvil failed to make such a move, the company will face being coerced into sharing some of their expensive accumulated infrastructure with their local rivals in telecom service without receiving any form of compensation in return– a potential situation that Carlos Slimm has described as “confiscatory”.

Telmex, América Móvil’s fixed-line operator holds about 80 per cent of the potential market in Mexico while its mobile division Telcel holds about 70 per cent of the market.

Suggesting that some kind of compromise situation may be in the offing, came in the statement from América Móvil which stated that all cellular base stations, including towers and related infrastructure, and in the process of being separated from Telcel and its services may be made available to other groups.

According to Central American business analysts, it now increasingly appears that América Móvil are heading in the direction of major US carriers such as Verizon and AT&T who have begun to divest subscribers in areas which generate lower levels of profitability, in preference to disposing of equity in their company.

América Móvil have the potential to follow in the footsteps of their major American counterparts, because in Mexico, mobile service concessions are granted according to regions. Speculation is that Mexican or even U.S.-based equity groups might be interested in picking up these rural subscribers while other major American companies could be interested in acquiring América Móvil’s infrastructure assets.

América Móvil stock has not enjoyed good times this year, falling more than eleven per cent in Mexico and around the same figure in the New York stock market where it is traded. However, expectations are that the proposed asset sale could drive the stock back up by between six to eight percent if and when it happens.

Mexico’s proposed telecoms reforms, which are scheduled for approval in Congress within the coming days, is expected to provide Telmex with a strong signal to move into television services, which, till now, it has been it is barred from doing.

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