Billionaire Carlos Slim announced Tuesday that the Mexican wireless provider America Movil (AMXL) sell some of its assets to lower its market share in an attempt to avoid Mexico's harsh new antitrust laws.
America Movil currently controls 70 percent of Mexico's mobile market with 272 million mobile customers and 70 million landline, broadband, and television customers. The company will sell off enough assets to bring its share of the telecom sector below 50 percent, which is the threshold of regulation. The company’s board announced they will sell some assets to another company that could boost investment in the telecom sector, according to Reuters.
Exactly what assets will be sold isn’t known, but the company said it plans to sell mobile towers and related infrastructure to be operated by a separate company, according to the Wall Street Journal.
Mr. Slim’s announcement came as Mexico’s lower house was approving the final details of a constitutional reform passed last year to shake up the stagnate telecom industry. In March, the regulatory committee Federal Institute of Telecommunications (IFT) found that America Movil was dominate because it controlled more than 50 percent of the market and would be subject to some of the toughest regulations in the company's history.
“The message is clear: They’re reacting to the regulatory pressure,” Julio Zetina, an analyst at Vector Casa de Bolsa SA in Mexico City, told Bloomberg News. “I’m surprised they have made a decision like this, and so quickly.”
Slim, who is the world's second wealthiest man, bought the state owned Teléfonos de Mexico in 1990. He is currently worth $75.9 billion. America Movil, valued at $73 billion, has lost $17 billion in market value since 2012, when Mexican President Enrique Pena Nieto, who said during the election that he would increase competition in the telecommunications market, took office.
"We're living a new historic phase in the Mexican telecommunications sector, which began with last year's constitutional reforms," former telecom regulator Mony de Swaan told the Wall Street Journal. "We're seeing the beginning of the end of a period of almost complete dominance of Mr. Slim."
Juan Pablo Adame, a member of Mexico's lower house, told the Wall Street Journal that America Movil's announcement "does away with the myth that [the bill] wasn't going to create competitive conditions. It's the first big success of the reform."
By noon on Wednesday, the company's stock was up almost 5 percent.