AM boosts Telmex stake to almost 93%

15 Nov 2011

Latin American telecoms giant America Movil (AM) has reportedly revealed that, on the back of preliminary results of a shareholder buyout offer, its stake in Mexican fixed line incumbent Telefonos de Mexico (Telmex) had risen to nearly 93% compared to the almost 60% it held prior to the offer. According to Bloomberg, AM will pay around MXN62.1 billion (USD4.6 billion) for the increased holding, with the company having funded the purchase via the sale of more than USD5billion in bonds in the UK, Japan, Switzerland and the US since August 2011.

As noted in TeleGeography’s GlobalComms Database, August 2011 saw AM chairman and controlling shareholder Carlos Slim confirm he was looking to complete the restructuring of his telecoms empire amid reports that AM had offered to buy the 40.4% stake in Telmex that it did not already own. AM said it would pay MXN10.5 per share for the outstanding Telmex shares, with the move arguably allowing the combined company to benefit from cuts in administrative costs. Further, it was suggested that the decision to take full control of Telmex would allow AM to integrate its telecom services in Mexico more closely, helping the company fend off increased competition from the likes of local broadcasting giant Grupo Televisa, which has already branched out into the fixed line voice and high speed internet sectors, and is preparing to launch commercial wireless voice services. With US-based AT&T, which held an 8.5% stake in Telmex at the time of the announcement, reported at that date to have indicated it would accept AM’s offer for its shares, AM subsequently launched a formal bid for the remainder of the Telmex stake in October 2011, confirming the MXN10.5 per share price it had initially announced in August.

Mexico, America Movil (AM), Telefonos de Mexico (Telmex)