America Movil Jumps on Buyback Increase, Finance Chief CommentsCrayton Harrison
America Movil SAB, the mobile-phone carrier controlled by billionaire Carlos Slim, rose the most in 10 months after an increase in share buybacks and optimism from its finance chief on Mexican telecommunications legislation.
The company is stepping up its share repurchases after the prospect of tougher regulation in Mexico pushed the stock to an almost four-year low. America Movil acquired 526 million shares since March 11, when lawmakers announced a plan to boost phone-industry competition. That total exceeds the 479 million Mexico City-based America Movil had acquired all year before that date.
The shares have fallen 17 percent this year amid investor concern that the legislation could give the government power to break up the company. America Movil, on the other hand, views the planned new rules as an opportunity to begin offering television services for the first time in Mexico, Chief Financial Officer Carlos Garcia-Moreno said.
“The reform is very positive because it provides a push to a sector that needed it,” Garcia-Moreno said today at the Bloomberg Mexico Economic Summit in Mexico City. “We welcome greater competition in Mexico.”
The shares gained 4.3 percent to 12.35 pesos at the close in Mexico City, the biggest increase since May 7. They ended last week at 11.60 pesos, the lowest close since April 30, 2009.
The company, the largest wireless carrier in the Western Hemisphere by subscribers, said this week that it plans to more than double its share buyback program to 79.2 billion pesos ($6.4 billion) from 39.2 billion pesos.
“That’s an impressive increase, assuming they do the whole thing,” said Chris King, an analyst at Stifel Nicolaus & Co. in Baltimore. “They need to try and stem the bleeding -- the stock is awfully cheap.”
King said he’s maintaining a hold rating on America Movil shares, in part because the Mexican legislation is making it difficult to predict the company’s performance.
America Movil has 70 percent of Mexico’s mobile-phone lines and about 80 percent of its land lines.
While the company didn’t say how quickly it planned to put the additional buyback funds to work, the lower share price means America Movil would have enough in its budget to acquire almost 9 percent of its outstanding shares.
Slim, 73, owns about 43 percent in America Movil, the biggest of his $70 billion in holdings, according to the Bloomberg Billionaires Index.
An America Movil press official didn’t respond to e-mails seeking a comment.
America Movil added 30 billion pesos to its buyback fund last year and ended up spending 17.8 billion pesos. In 2011, it spent 53.7 billion pesos after boosting the fund by 50 billion pesos in April of that year, bringing the total in its repurchase budget at the time to more than 80 billion pesos.