Shares in América Móvil (AMX) gained more than 6% on Wednesday after the Latin American phone company controlled by Mexican billionaire Carlos Slim said it would sell assets to avoid tougher regulations from the government.
América Móvil said its board approved the measures to divest some assets to a newly formed independent company, reducing its market share to less than 50% of the telecommunications market, which is the threshold for dominance under Mexico’s new telecom laws.
The carrier also said that it would sell its cellphone towers and will renounce its rights to acquire control of satellite-TV provider Dish Mexico that has 30% of the market.
The move comes as Mexico’s Congress new laws, which are aimed at curbing Slim’s power, impose strict regulations on dominant firms. América Móvil, Latin Americas’ largest operator with 272 million wireless subscribers, controls about 70% of Mexico’s mobile-phone subscribers and about 80% of landlines. Slim and his family hold 57 percent of América Móvil.
“We’re living a new historic phase in the Mexican telecommunications sector, which began with last year’s constitutional reforms,” former telecom regulator Mony de Swaan told the Journal. “We’re seeing the beginning of the end of a period of almost complete dominance of Mr. Slim.”
Under the proposed law, América Móvil would have 365 days to implement a breakup plan, though the company would still be subjected to its restrictions as the dominant carrier.
América Móvil has currently a market cap of more than $83 billion. According to Bloomberg, the company has lost about $17 billion in market value since President Enrique Pena Nieto took office in 2012 on promises to spark more competition to boost the Mexican economy.