Slim Ties $1 Billion Colombia Network Investment to Regulation
Billionaire Carlos Slim said his America Movil (AMXL) SAB will spend $1 billion on network investments in Colombia next year if regulators reverse course and grant the company access to 4G wireless airwave licenses.
The investment would be an increase from $920 million this year, Slim, America Movil’s controlling shareholder, told reporters today in Cartagena, Colombia. The Mexico City-based company also plans a $30 million real-estate project around one of its operational complexes in Bogota, he said.
Colombia’s government is drawing up a plan for an auction of fourth-generation radio licenses, and an early document outlining the bidding process excluded America Movil. Lawmakers and competitors such as Telefonica SA (TEF) and Empresa de Telecomunicaciones de Bogota say the company’s 60 percent market share makes it too dominant and limits competition.
“Excessive regulation inhibits investment in the sector,” Slim said. “It undermines legal certainty and delays the possibility of mobile broadband.”
America Movil’s Colombia and Panama division makes up 8.6 percent of revenue and is the company’s third-most profitable market behind Ecuador and Mexico, according to data compiled by Bloomberg. The unit recorded a profit margin last year of about 47 percent, leaving out interest, taxes, depreciation and amortization.
Hajj said today America Movil is budgeting about $10 billion next year for network investments across Latin America.
Slim said doesn’t plan to personally discuss the 4G auction with Colombia President Juan Manuel Santos. He didn’t say how much the company, which operates under the Claro brand in Colombia, would spend next year if it is excluded from the auction.
“I don’t think that’s an option, because I wouldn’t understand how you could leave 26 million Claro clients without access to new technology,” he said.
A bill presented this week to Congress to cap market share in Colombia’s mobile-phone market at 30 percent probably won’t be supported by the government, America Movil Chief Executive Officer Daniel Hajj told analysts today on a conference call.
The proposed bill seeking to cap market share, introduced by Jorge Robledo, an opposition leader in the Senate, is backed by 18 other lawmakers, said Roy Barreras, president of Colombia’s Congress. Barreras, a member of the ruling party who supports the proposal, said there’s a good chance the bill will pass.
Slim said he continues to be interested in investments in Colombia’s energy market. Last year, his holding company Grupo Carso SAB agreed to pay $23.3 million for a 70 percent stake in Tabasco Oil Co., which has a contract to explore and produce oil in a field in eastern Colombia.
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