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America Movil to break up ahead of antitrust laws
Telecommunications » Carlo Slim bowing to pressure to divest phone company assets.


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Slim, 74, and his family hold a 57 percent America Movil stake, representing more than half of his $71.5 billion fortune, according to the Bloomberg Billionaires Index. His holdings include an 8.3 percent stake acquired from AT&T last month for $5.6 billion.

Depending on the assets it sells, an America Movil breakup may mimic previous efforts around the world to dismantle dominant phone carriers to create more competition -- a goal that has proven difficult to accomplish.

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To settle an antitrust suit in the U.S., AT&T agreed in 1982 to split with its regional phone networks, which would provide local telephone service while the national company focused on long distance, manufacturing and research. Many of those units are now part of the same company again, called AT&T Inc., while Verizon Communications Inc. owns most of the rest.

In Brazil, the government broke its telephone monopoly into 12 holding companies in 1998, including three regional landline carriers, eight mobile-phone companies and one long-distance carrier. They have since joined forces to create four major telecommunications providers in Brazil.

A breakup of America Movil may not immediately lead to other companies filling the infrastructure investment gap left by Slim’s carrier, said Duncan Wood, director of the Mexico Institute at the Woodrow Wilson International Center for Scholars in Washington.

"What is the incentive for any smaller companies to actually invest? Will they have the economies of scale to make it worthwhile?" Wood said. "This in the short and medium term may actually slow down the transformation of the telecom sector in Mexico because there’s no actor big enough now to make investment decisions in infrastructure."

America Movil has gone through various configurations since Slim acquired Telefonos de Mexico, the state phone monopoly, in a 1990 privatization sale. Telmex, as the landline carrier is known, spun off its wireless unit a decade later to create America Movil. Both companies grew internationally with acquisitions throughout Latin America, and America Movil acquired full control of Telmex, its former parent, in 2012.




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