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Mexico News: Slim Company Faces $1 Billion Fine
Apr. 25, 2011

Published by Minyanville

America Movil (AMX) has been fined a record-breaking $1 billion for cellphone subsidiary Telcel’s monopolistic practices which give it a 71% market share in Mexico. Owned by world’s richest man, Carlos Slim, the company has been dogged with controversy over the fees it charges to connect calls to other networks.

The carrier had 225 million cellphone customers at the end of 2010, with 64 million of them in Mexico. A dirty war has been waged between Slim’s company and cellphone network Iusacell, as well as broadcaster Televisa (TV), which owns Telmex. This included television adverts taken out by an anonymous group parodying Slim in “The Slimsons.”

Televisa itself raised the stakes by announcing its intention to buy 50% of Iusacell for $1.6 billion in order to enter the wireless market and offer low prices and higher quality. This purchase is expected to take around six months as antitrust authorities give their approval.

Last week’s $1 billion fine is a result of investigations that have lasted just under five years. No specifics have been released. Shares in America Movil fell 1.9% on Monday with the news, the biggest drop in a single day since November. Shares in the company have dropped 6% since the beginning of 2011.

Slim owns Telmex, Grupo Carso as well as Telcel and topped Forbes’ Rich List earlier this year. Nothing, it seems, can put a halt to his ambitions. He announced this week that he is to invest about $1.5 billion in Argentina’s telecommunications sector. He is thought to be visiting Argentina’s president Cristina Fernández de Kirchner to finalize the investment. This comes after an announcement that America Movil is to invest $2 billion in Chile over the next four years, part of an $8.5 billion investment plan for 2011, topping the $6.5 billion it invested in 2010.

Slim is also rumored to be in talks with Australian newspaper tycoon Rupert Murdoch in order to make a joint bid for control of Formula One.

Mexico's IPC Dips; First Quarter Results Mixed

Mexico’s economy often ebbs and flows with that of the United States, with 80% of exports heading north of the border. Standard & Poor’s announcement this week that it is to change its outlook for the United States’ credit rating to negative has prompted a sharp drop in Mexico’s IPC index, which fell 1.8% on Monday to 36,332 points. It did rise again on Wednesday leading into the holiday weekend, with the IPC up to 36,816 points.

Cement manufacturer Cemex (CX) saw shares down 3.2%, on Monday their lowest in over a month, while Alfa (ALFA) shares fell 4.1% despite the previous week’s rise on better-than-expected first-quarter earnings.

Wal-Mart de Mexico (WMT) shares dropped 0.6% after disappointing first-quarter results, thought to be down to a late Easter break as well as higher expenses -- despite an increase in sales. Profit was up this first quarter compared to last year, below expectations according to Reuters.

General expenses, however, rose 22% on the same period last year while revenue climbed only 18%.

The company is expanding all over the region, with 42 new stores opened in the first quarter alone, entering 10 new cities for the first time. At the end of March, the company had 2,318 stores across Mexico and Central America.

Grupo Mexico (GMBXF), the Mexican mining and railroad company, announced first-quarter profit up a staggering 47% on the same period last year to $531.7 million. It puts the increase down to greater copper production, higher metals prices and increased sales. Sales were up 26% to $2.5 billion as the company increased production at the Cananea -- now renamed Buenavista -- mine, reopened in 2010 after a union dispute.

War on Drugs Back in Headlines

Mexico’s war on drugs is again in the news as CBS learned this week that authorities there are exploring the filing of civil charges against US gun manufacturers and distributors over the weapons that flow south into the country. President Felipe Calderón has long accused the United States of not doing enough to curb the weapons that he claims fuel the violence in his country.

Authorities in northern Mexico arrested 45 police officers alleged to be liked to the Zetas, a notorious drug gang. The case highlights the corruption that is so common in Mexico and makes the job of authorities there so much more difficult.




More...

No deaths in major Mexico earthquake
Mar. 21, 2012


Mexican authorities come close to capture of drug boss Chapo Guzman
Mar. 12, 2012


Joe Biden meets Latin American leaders, won't back down on legalization
Mar. 06, 2012


Mexico election: Vazquez Mota closing the gap
Mar. 02, 2012


US and Mexico Sign Gulf Oil-Drilling Deal
Feb. 24, 2012


Deadly Mexican prison riot a cover for gang escape
Feb. 21, 2012


Felipe Calderon pleads to US: 'No more weapons'
Feb. 18, 2012


Mexican Inflation Up as 4Q Results Suffer From Peso Depreciation
Feb. 10, 2012


Josefina Vázquez Mota picked for Mexico presidential candidate
Feb. 06, 2012


Carlos Slim's Companies Accused of Gross Overcharging
Feb. 03, 2012


Telecoms, Broadcast Monopolies Prospering in Mexico as Televisa's $1.6bn Iusacell Deal Is Rejected
Jan. 27, 2012


Mexico's Chapo Guzman named world's most powerful drug trafficker
Jan. 12, 2012


Mexico Looks to Broker Europe Deal
Dec. 16, 2011


Carlos Slim Streams "Television" Online, Infuriates Rival Broadcasters
Nov. 17, 2011


Mexico Reduces Growth Forecast Despite Lower Than Expected Inflation Figures
Nov. 11, 2011








© Girish Gupta