Carlos Slim`s America Movil Faces Breakup Pressure From Bill
Baku, March 13 (AZERTAC). Mexican lawmakers announced legislation yesterday that threatens to rein in the country`s telecommunications monopolies, raising the possibility of a Ma Bell-style breakup for Carlos Slim`s dominant America Movil (AMXL) SAB.
The bill, which will be presented in Mexico`s congress, would create an agency with the power to regulate competition in the phone and broadcasting industries, Communications and Transportation Minister Gerardo Ruiz Esparza said yesterday. The proposal took a toll on shares of America Movil, which has 70 percent of mobile-phone subscribers and 80 percent of landlines. The stock plunged to its lowest price in almost four years.
The goal of the legislation is to create more competition in the $30 billion Mexican communications industry, which is dominated by a handful of the nation`s wealthiest people. Smaller carriers that have struggled to compete against America Movil, for instance, could seek takeovers from non-Mexican companies for the first time. Depending on how the bill is crafted, Grupo Televisa SAB (TLEVICPO), which has 70 percent of Mexico`s broadcast-TV audience, could also be affected.
“This is one of the bigger threats we`ve seen for America Movil from a regulatory standpoint,” said Chris King, an analyst at Stifel Nicolaus & Co. in Baltimore, who has the equivalent of a neutral rating on the shares. “It certainly could be the beginning of some type of significant change for the industry itself, particularly if you get regulators with real teeth.”
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