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America Movil Sinks Third Day on Telecom Reform Bill Concern

America Movil SAB, Mexico’s largest telephone company, plunged the most in a month on speculation that a proposed bill designed to bolster competition will reduce the company’s market share.

The stock plunged 7.8 percent to 11.83 pesos at the close of Mexico City trading, the biggest drop since Feb. 13. Trading volume was three and a half times the three-month average. America Movil, controlled by billionaire Carlos Slim, has tumbled 13 percent since the plan was unveiled March 11.

The legislation would create an agency with the power to regulate competition in the telecommunications industry and force companies to divest assets. Some measures would apply to dominant operators with a market share of at least 50 percent. America Movil has 70 percent of mobile-phone subscribers in the country 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 Holdings Plc 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.

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