HOT OFF THE WIRE

America Movil Sinks Third Day on Proposal for More Competition

America Movil SAB (AMXL), Mexico’s largest telephone carrier, plunged for a third day on speculation that a proposed bill designed to bolster competition will reduce the company’s market share.

Shares plunged 5.8 percent to 12.09 pesos at 10:54 a.m. in Mexico City trading, poised for the lowest closing price since June 2009. America Movil, controlled by billionaire Carlos Slim, has fallen 11 percent in the three days since the bill was announced. The stock is down 19 percent this year.

Mexican lawmakers announced legislation this week that would create an agency with the power to regulate competition in the phone and broadcasting industries and require asset sales if needed. The bill defines a dominant operator as anyone with market share of more than 50 percent. Mexico-City based America Movil has 70 percent of mobile-phone subscribers and 80 percent of landlines.

“It will mean more competition,” Manuel Jimenez, an analyst with Banorte IXE Grupo Financiero in Mexico City who rates the stock hold, said in a telephone interview. “The stock could stay at these levels for several months.”

HSBC cut its rating on the stock to neutral from the equivalent of buy in a note dated yesterday and lowered estimates for revenue and earnings before interest, taxes, depreciation and amortization, or Ebitda.

“Enforcing a 50 percent market share cap on America Movil would likely drive significant cuts in revenue and Ebitda growth,” Richard Dineen and Sean Glickenhaus, analysts with HSBC, wrote in the report.

Credit Suisse also lowered its rating on the shares to neutral from the equivalent of buy earlier this week.

To contact the reporter on this story: Danielle Verbrigghe in New York at dverbrigghe@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

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