Slim’s Empire Breakup Seen Spurring Up to $20 Billion in Deals
2014-07-10 04:59:59.0 GMT
By Ben Bain and Nacha Cattan
July 10 (Bloomberg) -- Carlos Slim’s plan to break up his
telecommunications empire will give a boost to Mexico’s
financial firms by generating as much as $20 billion in deals,
one of the billionaire’s bankers said.
Grupo Financiero Santander Mexico SAB Chief Executive
Officer Marcos Martinez, 60, said the dismantling of America
Movil SAB will fuel mergers and acquisitions, underwriting and
advising work for financial institutions. He called Slim’s
company “a very important client.”
“We’re excited,” Martinez said yesterday in an interview
in the Mexico City headquarters of the nation’s fourth-largest
bank by outstanding loans. “This announcement for America Movil
is a huge opportunity for the banks, including us, because of
the investment that they’re going to do.”
Slim, the world’s second-richest person, will divest
America Movil assets, the company announced this week. The
largest Latin American telecommunications company, with a market
value of about $79 billion, America Movil is shrinking to
appease regulators and avoid fines for having more than 50
percent market share in Mexican landlines and mobile phones.
Martinez said his firm, a unit of Spain’s biggest bank,
will be among lenders pin
"}ing to help America Movil make deals.
Slim, 74, and his family hold a 57 percent stake in the firm,
which has 272 million wireless subscribers in Latin America and
70 percent of Mexico’s mobile-phone market.
“There is an opportunity to advise them, to take to the
market some of the assets that they are going to sell,”
Martinez said. “It will be M&A opportunities.”
Facing Penalties
Slim’s flagship faces the toughest penalties under
antitrust laws that Mexican President Enrique Pena Nieto could
sign as soon this week. Pena Nieto took office in 2012 with
promises to break monopolies in sectors including
telecommunications.
Mexican lawmakers approved legislation yesterday that would
force some companies including America Movil to share parts of
their networks and eliminate fees charged to other operators to
connect calls to their customers.
“The regulatory environment has become more efficient,”
Martin Lara, a Mexico City-based analyst with Corp. Actinver SAB, said in a
telephone interview. “Other companies will want to participate here, especially
if Slim sells something. Because the competitive environment is more balanced
now.”
America Movil didn’t specify which assets would be sold.
The Mexico City-based company may receive about $8.6 billion
from the sales and will need to divest about 21 million wireless
users and 4 million landlines, Lara said in a note to clients.
Stock Climbs
Shares of Slim’s company surged 9.4 percent yesterday in
Mexico City after the announcement, the most since April 2009.
The firm trades at 12.1 times analyst estimates for next year’s estimated
earnings, the least among the 10 biggest telecommunications companies in
the Americas, which have an average of 19.3 times, according to
data compiled by Bloomberg.
The divestment decision “should have a positive effect on
the market” in Mexico, Manuel Jimenez, an analyst at Grupo
Financiero Banorte SAB, said in a phone interview. “It should
improve the environment of doing business in Mexico. If the
country has an improved global perception and growth
perspective, that would attract investment.”
For Santander, Mexico’s fourth-largest bank by lending, the
announcement comes amid a push to boost the commercial business.
Martinez said he expects Santander’s loan growth to outpace the
Mexican financial system’s expansion over the next three years.
The bank’s portfolio could grow by 16 percent or 17 percent
in the next three years and borrowing from small- and medium-
sized companies may increase 30 percent annually, he said.
A press official for America Movil didn’t respond to an e-
mail message seeking comment after normal business hours.
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--With assistance from Isabella Cota, Eric Martin and Patricia
Laya in Mexico City.
To contact the reporters on this story:
Ben Bain in Mexico City at +52-55-5242-9256 or
bbain2@bloomberg.net;
Nacha Cattan in Mexico City at +52-55-5242-9283 or
ncattan@bloomberg.net
To contact the editors responsible for this story:
Christine Harper at +1-212-617-5983 or
charper@bloomberg.net
Dan Reichl, Carlos Manuel Rodriguez