The chances of retaining the earnings growth of America Movil, the telephone company and cellular businessman Carlos Slim, has been limited to increased competition in the markets in which it participates, analysts warned Tuesday.
The company, which accounts for more than two thirds of the markets for fixed and mobile telephony, has lost a fifth of its value in the Mexican Stock Exchange so far this year, a decline equivalent to 13 billion dollars . The decline in market value is the result of a possible legal change to increase competition in the sector. Although legal reform proposal was submitted last week, since December was embodied in the so-called Pact for Mexico, which has affected the stock price of the firm, said Accival brokerage Banamex group.
America Movil announced yesterday that increase by 40 billion pesos the amount of resources available for the acquisition of shares in the Mexican stock market.
On Tuesday, the stock market suffered a setting. The index of prices and rates fell 544 points, 1.28 percent, to settle at 42 000 60 units. Last week he had accumulated a loss of 3.9 percent, mainly affected by the loss of America Movil, said Accival.
Grupo Financiero Invex analysts Tuesday that cited increased competition existing in the sector, along with a trend in demand for telecommunications services for businesses involving a higher cost in execution, are among the structural reasons for a loss value of the shares of America Movil traded on the Mexican stock market. To this, abounded, add the initiative to amend the Telecommunications Act, in which one of the most important elements is to level the competitive conditions in the shoulder of the market share. We believe that the adoption of the initiative, integration of regulatory bodies and the establishment of specific regulations will not be before the end of the year, we anticipated episodes of volatility will continue for the shares of America Movil, considered Invex.
The prospect of lower profitability was mentioned at a time when Tuesday began the process of discussion of the reform of the telecommunications industry in the full House of Representatives.
America Movil, the company’s wireline and wireless Carlos Slim Helu, has lost a fifth of its value on the Mexican Stock Exchange (BMV) this year, Accival reported, based on information from the stock market, which listed those titles. This variation results in a depreciation of the company equivalent to 13 thousand 800 million dollars.
Although the reform initiative in the telecommunications sector was sent to Congress last week in Mexico Pact, signed on last December, included several items related to seek greater competition in the sector, presented Accival, explaining the This year cumulative decline in the value of the shares of America Movil and to a lesser extent, Televisa.
Coming to becoming law reform initiative in the telecommunications sector, there could be major changes in the way how companies operate and this was reflected in stock prices last week, spoke on Tuesday Accival.
Last week, shares of America Movil fell 15 percent and did Televisa 5 percent. Meanwhile, smaller companies in the sector, as Axtel and Mega, were favored with increases of 9 and 15 percent, reported Accival.
After Monday was a holiday in the Mexican stock market, on Tuesday titles series America Movil L closed at 11.79 pesos per share, 19 cents above Friday’s close, representing a gain variation of 1.6 percent. The CPO Series titles Televisa continued to fall, like every day last week. Yesterday ended at 64.20 pesos, 1.3 percent less than on Friday.
Accival noted that the same trend of decline in the share price of America Movil and Televisa is observed throughout the year, even if the proposed amendment was not made public until last week, as was already stated Pact in Mexico.
This year America Movil titles have depreciated 20 percent. At the beginning of 2013, the company had a market value of one trillion 37 billion 500 million pesos, which has fallen by one-fifth, to settle, with last Friday’s data on 864 000 558 million pesos. In turn, shares of Televisa accumulated depreciation this year of 6 percent.
The loss in the market value of the company (the number of shares outstanding multiplied by the unit price of the securities) amounted to 172 000 911 million pesos, about 13 thousand 800 million dollars, according to data stock market trading and reporting Accival.
Announced a proposed cash dividend to shareholders of $ 16.5 billion
America Movil announced an increase of 40 billion pesos to fund share repurchases, which last week suffered a setback near 15 percent, affected by the uncertainty caused by telecommunications reform. So far this year, through the financial group Inbursa, the financial arm of the business consortium of Carlos Slim, has channeled more than 11 thousand 500 million pesos to contain the immediate negative effects of the proposed changes by the federal government for the telecommunications market.
Yesterday the same company informed the market its strategy to increase the amount of resources injected to repurchase shares of Series L, which are listed on the Mexican Stock Exchange (BMV).
At the same time announced a proposed cash dividend to its shareholders, ie those who maintained their confidence in the company, despite the uncertain future that many will in store. The total distribution, taking into account the shares of the series A, AA and L in circulation, would rise to more than 16 thousand 519 million pesos from the account balance of net tax income.
A report financial group Santander Mexico asserts that the proposed reform is bad for AMX (America Movil) and Televisa. America Movil’s shares have lost 14 percent during the last week, due to the announcement of the reform initiative in the telecommunications sector, which will result in increased competition and tighter regulation for the company. Amx’s action last week recorded a minimum of 11.65 pesos, similar to what they had in early 2007.
Until Thursday of last week, Inbursa had repurchased shares of America Movil L series for about 10 thousand 500 million pesos, in order to arrest the sharp fall in the stock price of the company’s main group Slim Helu tops, following the presentation of telecommunications reform on Monday March 11.
On Friday pumped another billion 52 million 921 thousand 340 pesos in the repurchase of equity securities to stem a collapse in the value of the company on the stock market. This represents the largest amount allocated to a buyback in one day. It was for a package of 90 million shares at a price of 11.699126 pesos per unit.
Considered industry specialists who have not completed the damages you may suffer the leading telecommunications company in Latin America. For AMX (America Movil) the proposed reform does not generate a significant loss immediately, but in the medium term may adversely reconfigure the environment in which the company operates. This will weigh on the stock for a long time, which is at its lowest level of the past 52 weeks, according to a report by analysts at financial group Santander Mexico.
Add: It is clear that there is short-term catalysts for the station, rather than the low valuation. We believe that the share price was excessive considering the low valuation and decided to keep the position in Amx in expectation of selling at a better price when negative sentiment towards the station is moderate and action recover some of its value.
According to the same report, Valder Nogueira, Latin American telecommunications analyst, thinks that now is not the time to buy Amx and believes that we must be out of the telecommunications and media sector at the moment. If you want to maintain exposure to the exchange to Amx should Televisa.