Reuters: Hot Stocks: UPDATE 2-Mexico's America Movil shares fall on reform, weak profit

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UPDATE 2-Mexico's America Movil shares fall on reform, weak profit Apr 19th 2013, 16:22 Fri Apr 19, 2013 12:22pm EDT (Adds comments from call, detail on buybacks) MEXICO CITY, April 19 (Reuters) - Shares of America Movil, Latin America's biggest phone company, fell more than 3 percent on Friday after it reported a weaker quarterly profit and Mexico's senate approved a bill to increase competition in the country's phone and television markets. The shares have fallen more than 18 percent since the start of the year on worries the company is struggling amid increasingly aggressive regulation and competition in Latin America. The company is owned by the world's richest man, Carlos Slim. Competition in countries such as Brazil is squeezing America Movil's profit margins, forcing it to pay more to subsidize expensive Internet-enabled handsets to win customers. Meanwhile, regulators in Colombia and Mexico have been curbing the fees America Movil can charge rivals to connect to its network. Mexico's government has committed to reforming the country's telecom sector and early on Friday morning, the senate approved a bill that would declare companies with greater than 50 percent market share as dominant, potentially forcing asset sales. "It looks like we're going to be a dominant player," said America Movil Chief Executive Daniel Hajj, who is also Slim's son-in-law. He added that little else is clear about the reform so far. America Movil has a 70 percent share of Mexico's mobile phone market and 80 percent of the country's fixed line market. In response to a question from an analyst on the company's conference call, Hajj said it is too early to make any decision about possible asset sales before there are details of the secondary laws that will follow the constitutional reform. Politicians who helped draw up the bill said declarations of dominance will not automatically lead to forced asset sales. Lawmakers from President Enrique Pena Nieto's Institutional Revolutionary Party say the bill should be approved next week. SHARE SLUMP America Movil shares were down 2.72 percent at 1600 GMT, compounding a slump since the start of the year that the company has sought to stem with aggressive buybacks. Latin America's biggest phone company has spent more than $1.6 billion year-to-date buying back shares to support its stock price. At an annual shareholder meeting on Monday, investors - controlled by Slim and his family - will vote on increasing a fund to buy back shares by 40 billion pesos ($3.27 billion) There were some bright spots in the company's first-quarter results: executives said they see competition becoming more "rational" in Brazil, which could mean lower handset subsidies in the future, and the company's U.S. business Tracfone is outstripping growth expectations. But the positive news was not enough to offset the uncertainty over the Mexican telecom reform. Mexico is America Movil's biggest market, accounting for more than one-third of first-quarter revenue. ($1 = 12.2238 Mexican pesos) (Reporting by Elinor Comlay; Editing by Dan Grebler) Link this Share this Digg this Email Reprints

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