Carlos Slim May Pour $14 Billion To Strengthen Latin American Cell Phone Empire

Ivan Castano, Forbes (24/01/12):

The richest man in the world wants to make sure his cell-phone company America Movil, the largest in Latin America, remains that way. To do so, Mexican billionaire Carlos Slim Helu could invest at least $13.9 billion to grow the network in Brazil and Mexico this year, analysts said.

Their estimates follow America Movil’s announcement last week that it plans to issue $2.5 billion of bonds in the next few years. The notes will be issued in Mexican pesos and will carry maturities from 1 to 40 years, the company said in a regulatory statement.

Spokespeople at America Movil would not say when the first bond sale will take place. One banker at Slim-owned investment bank Inbursa would only say the funds will be used for “general corporate purposes.”

America Movil analysts, however, said the funds will be used to bankroll America Movil’s aggressive plan to grow its smartphone data business in Latin America, particularly in the largest markets: Mexico and Brazil.

“Smartphone data usage is growing 30-40% a year [around the world] but in Mexico, it’s just at 10%,” said Julio Zetina, an analyst with Vector Casa de Bolsa in Mexico City.

Zetina added America Movil’s Telcel Mexican wireless unit and Telmex will together invest at least $8.5bn this year to grow their cell-phone data tranmission capabilities.

“They need to build a whole bunch of new antennas, expand Telmex’s fiber optic network, through which data can also connect from antenna to antenna, or do both,” Zetina said.

Either way, the expansion will be massive as Slim works to dominate the smartphone data industry in Mexico.

America Movil also recently announced plans to plough as much as $5.4 billion into its Brazilian wireless franchise in 2012, up from $5 billion spent in 2011. The company has some $10 billion in cash to grow its business, Zetina said.

Through America Movil, Slim, who had an estimated net worth of $63.3 billion in November, owns several Brazilian assets, including the Claro wireless network, fixed-phone company Embratel and cable TV broadcaster Cable Net.

This year’s capital expenditures will go to build an under-sea cable to transmit data from the US to Brazil, expected to cost $540 million, Claro Brasil’s President Carlos Zenteno was quoted as telling Brazilian daily Folha de Sao Paulo on December 27.

America Movil also wants to broaden its fast-internet for cell-phones (3G) business, enlarge its fiber optic network and bid for the concession of new 4G lines in Brazil in April, an America Movil spokesman confirmed.

Claro is Brazil’s third-largest wireless network with a 25% market share, while Embratel has 18.2% of the fixed-line market, according to telecoms watchdog Anatel. Cable Net is billed the country’s largest cable TV broadcaster with a 40% market share.