America Movil sees tender offers soon
Latin American cellphone heavyweight America Movil, controlled by tycoon Carlos Slim, could close tender offers for Telmex Internacional and Carso Global Telecom in a month, Chief Financial Officer Carlos Garcia-Moreno
The company's tender offers for Carso Global Telecom (TELECOMA1.MX), which controls Telmex (TELMEXL.MX), and Telmex Internacional (TELINTL.MX) have not yet been approved by Mexico's stock market regulator but Garcia-Moreno said they were imminent.
"Today we have the impression we could be closing the transaction perhaps in early June. We're practically ready to present the tender offers," Garcia-Moreno told the Reuters Latin American Investment Summit in Mexico City.
Reacting to tougher regional competition, Slim unveiled a plan in January to shift control of his Mexican fixed-line company, Telmex, and regional fixed-line group Telmex Internacional into his flagship America Movil (AMX.N) (AMXL.MX).
The combined companies will be able to share infrastructure and offer clients more services, Garcia-Moreno said. "Some companies have already done it. We have to do it. The advent of data is in many ways a game changer and you need to be prepared to deliver these data services to the clients in the future."
America Movil has been reluctant to say how much money it might save by consolidating Slim's regional phone operators.
"The main part of the synergies we're going to be creating will be in investment spending. We plan to keep investing at the same pace as now, which means ... we'll be able to do more things more quickly," Garcia-Moreno said.
As Latin American economies recover, he estimated the consolidated America Movil would have 300 million clients by end-2011. That would put it far ahead of rival Telefonica (TEF.MC), which in December had 169 million fixed-line, wireless, Internet and TV connections across Latin America.
America Movil, with operations in Mexico, Brazil, Chile, the United States and elsewhere in the region, said earlier this year the consolidation of Telmex Internacional and Carso Global Telecom would boost the client base to around 250 million.
America Movil is betting heavily on Internet-oriented products, promoting smartphones and selling cheap laptop computers and modems on monthly payment plans.
Revenue related to data already accounts for 21 percent of America Movil's sales and Garcia-Moreno said that figure would keep climbing fast.
Handsets like Research in Motion Ltd's (RIM.TO) Blackberry and Apple Inc's (AAPL.O) iPhone are too costly for most clients in Latin America. But Garcia-Moreno said the arrival of cheaper versions means nearly all America Movil's clients should have email access on their phones within five years.
Slim's companies could soon face tougher competition in Mexico, where they dominate the telecom market. The government is auctioning wireless frequencies that Telefonica, the No. 2 cellphone operator, has been waiting for years to acquire.
Heavyweight media company Televisa (TLVACPO.MX) (TV.N) said in February it would buy 30 percent of NII Holdings Inc's (NIHD.O) Nextel Mexico wireless operator for $1.44 billion if their joint bid for cellphone frequency succeeds at the upcoming auction.
Also, Telefonica has teamed up with Televisa and cable operator Megacable (MEGACPO.MX) to bid for a fiber-optic network being auctioned by the government as an alternative to the backbone owned by Telmex.
Telmex owns nearly all of Mexico's telephone cables and even the copper wire leading into homes, giving it a powerful hand against smaller companies offering phone or Internet services, but which need access to infrastructure.
America Movil shares traded down 0.25 percent to 31.53 pesos in the Mexican stock exchange, while its New York-traded stock fell 1.94 percent to $49.48.
[Source: By Cyntia Barrera Diaz and Noel Randewich, Reuters, Mexico City, 05May10]
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