NEW YORK (TheStreet) -- America Movil (AMX) shares surged Wednesday after the Latin American telecom provider said it would sell assets to cut its Mexican market share.
The Mexico city-based company announced Tuesday that it would "reduce its national market share in the Mexican telecommunications market under 50%." The assets to be sold were not disclosed.
This move coincides with the Mexican government's attempts to eliminate the quasi-monopolies in the country's telephone and media markets, virtual monopolies that have made telecom services in Mexico among the highest in the hemisphere. If the company didn't reduce its market share, the government said it could be subject to operating restrictions.
According to The Wall Street Journal, America Movil controls about 70% of Mexico's mobile subscribers and fixed phone lines. It has 272 million wireless subscribers, making it the largest operator in the Americas. The company is controlled by Carlos Slim, the world's second-richest man. At yesterday's close, the company was valued at $73 billion. Slim, 74, and his family hold a 57% stake, more than half of his $71.5 billion total net worth.
Liberalizing the telecommunications market is one of the seven reforms undertaken by Mexican president Enrique Pena Nieto when he took office in 2012. He has also reduced a state oil monopoly and improved competition in Mexican banks. Since he took office, America Movil's market value has declined by $17 billion. PeAAA±a Nieto's term ends in 2018.
"This decision is a direct consequence of the regulatory framework created by the telecommunications reform," the Communications and Transportation Ministry, which reports to Pena Nieto, said in a statement yesterday. "This decision may transform the conditions of effective competition in the telecommunications sector, with greater quality and better prices for services to end users."