2nd UPDATE: America Movil Plans To Buy Out Remaining 40% Of Telmex
August 01 2011 - 7:19PM
Dow Jones News
Mexican telecommunications heavyweight America Movil SAB (AMX,
AMX.MX) said Monday it plans to make an offer for the 40% of
fixed-line unit Telefonos de Mexico SAB (TMX, TELMEX.MX), or
Telmex, which it doesn't already own, completing the consolidation
begun last year of the telecomunications holdings of billionaire
Carlos Slim.
America Movil, Latin America's largest wireless phone service
provider with 236 million mobile subscribers in 18 countries, and
54 million fixed-line service subscriptions, said it will offer
10.50 pesos (90 cents) in cash for each of the Telmex shares it
doesn't own. That values the offer at about MXN76 billion, or $6.5
billion. If the company obtains sufficient shares, it plans to
delist Telmex from the different markets where it trades.
"With this transaction, America Movil, a competitive and strong
publicly traded Mexican corporation, will be in a position to
provide better conditions and more advanced telecommunication
services to its customers in Mexico," Ameica Movil said.
The price represents an 11% premium over the average price of
Telmex L shares for the past 30 trading days. America Movil L
shares traded on the Mexican stock exchange fell 1.9% to MXN14.83,
while Telmex L shares rose 7.7% to MXN10.22. Telmex stakeholder
AT&T (T) said in a regulatory filing that it plans to tender
its Telmex shares, for around $1.37 billion.
America Movil Chief Financial Officer Carlos Garcia Moreno said
in a telephone interview that the company will use a combination of
cash and available credit lines to pay for the offer, and that bank
credits could later be refinanced in capital markets.
Buying out Telmex would complete the consolidation of Slim's
telecommunications holdings. Last year, America Movil acquired
Telmex Internacional and Telmex holding company Carso Global
Telecom, which included just under 60% of Telmex, in around a $23
billion stock-and-cash deal.
Moreno said that generating synergies from joining mobile and
fixed-line operations depends on the capacity to integrate the
companies, something that has become clearer to America Movil with
the integration over the past year of Telmex Internacional.
The proposed buyout, which includes Telmex's American depositary
receipts, would also complete the absorption of Telmex by its
mobile offspring, America Movil, which was spun off in 2001 at a
time when few expected the mobile industry to leave fixed-line in
the dust.
While America Movil saw a decade of robust growth through both
organic expansion and acquisitions, Telmex sought to replace
diminishing fixed-line phone revenue with value-added services such
as broadband Internet and corporate services.
America Movil's Mexican mobile unit Telcel and Telmex both face
increasing regulatory pressure in Mexico, where they have about 70%
of the mobile subscribers and 78% of the fixed phone lines,
respectively. Recently regulators slashed interconnection rates,
and Telcel is contesting a $1 billion fine levied on charges that
it used high mobile termination rates and its market weight to
sideline competitors.
Telmex, meanwhile, has been refused government authorization to
offer direct television service in Mexico to compete with cable
companies that are offering phone, Internet and video. The
government says Telmex hasn't met conditions set out in a 2006
agreement, while Telmex says it has complied.
-By Anthony Harrup, Dow Jones Newswires; (5255) 5980-5176;
anthony.harrup@dowjones.com
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