 Are leaner times ahead for telecom tycoon Slim?
(China Daily)
Updated: 2008-07-01 08:02 America Movil SAB, Latin America's largest mobile-phone company, is headed for its worst quarterly stock performance in six years as subscriber growth slows and regulators step up scrutiny of Carlos Slim's empire. The quarter ended yesterday may mark the last one in which Slim's America Movil posts more than a 20 percent increase in customers, said Walter Piecyk, a Pali Capital Inc analyst in New York. The gains may fall to 10 percent as the company runs short of new users to sign up in Mexico and Brazil, he said. Almost 80 percent of Latin America's population will own mobile phones by year-end, up from 23 percent in 2003, according to Pyramid Research in Cambridge, Massachusetts. That means fiercer competition with Telefonica SA, whose Mexican unit is the country's No 2 wireless carrier, for those left over.
"It's not bad growth, it's just not the super growth of before," said Martin Lara, an analyst at Vector Casa de Bolsa in Mexico City. "That has people nervous." He recommends buying America Movil shares and doesn't own any. Investors who rode the seven-fold share surge since the company split off from Telefonos de Mexico SA in 2001 may see smaller returns as growth slows. America Movil declined 20 percent in the three months through June 27, the biggest drop since the second quarter of 2002. The shares sank 13 percent April 25 after revenue missed analysts' estimates as airtime prices fell. "There's a concern that some of the trends we saw in the first quarter are going to continue," said Greg Lesko, who helps oversee $1 billion as managing director at Deltec Asset Management in New York, which owns 122,200 America Movil shares. America Movil, based in Mexico City, fell 4 centavos to 27.14 pesos on June 27 in Mexico trading. The stock has fallen 19 percent this year, compared with a less than 1 percent decline in the benchmark Bolsa Index. Slim, who ranked in March as the world's second-richest person after Warren Buffett on Forbes's annual list, bought the state-owned telephone company from the government in 1990 with other investors for $1.7 billion. He also owns two construction companies and a bank. The companies he controls account for more than a third of the Bolsa index and have a total market value of $165 billion. 'Room to grow' The 68-year-old Slim says America Movil has room to grow and that the percentage of people with mobile phones in Latin America will keep rising. "The market keeps growing," he told reporters after an event in Mexico City on June 23. "The important thing is not just how many telephones there are, but what services they have." America Movil is betting that services such as high-speed Internet access will make up for declining call prices. The company runs third-generation networks in more than 14 countries and will begin selling Apple Inc's new iPhone next month. The concern is that regulators will squeeze America Movil in markets such as Mexico and Ecuador, which the company dominates along with Spain's Telefonica, said Richard Ferguson, an analyst at Nomura Securities Co in London. Mexico is America Movil's top market, with a third of its 159 million users, followed by Brazil. The company says it has 73 percent of Mexico's wireless market and 25 percent of Brazil's. "Most markets are a duopoly, but it's starting to change," said Ferguson, who has recommended selling the shares since January 2007. "Governments are starting to act." In Mexico, the antitrust agency identified America Movil, Telefonica and Grupo Iusacell SA as dominant carriers June 13. The preliminary ruling may lead to rules forcing the companies to reduce fees they charge other carriers for connecting calls. Regulators plan to issue a final ruling in July. Agencies (China Daily 07/01/2008 page16) |
