América Móvil recovers value after separating from Sitios Latam and the businesses in Panama and Chile

América Móvil’s share price has rallied nearly 16% since September 30, 2022, a day after Sitios Latam’s disastrous IPO.

América Móvil divested of its infrastructure arm to maximize assets such as base stations, antennas, exchanges and other telecommunications components for 4G and 5G connectivity deployments in Latin America.

Sitios Latam lost 34.76% of the price of its titles on its first day of listing on the BMV and has only recently recovered from those losses.

América Móvil, the telecommunications group belonging to the family of magnate Carlos Slim Helú, already had notable declines in its share since January 2022, mainly due to negative performance factors in some of its business units outside of Mexico.

“The América Móvil share loses 16.73% during 2022, a fall that exceeds the negative balance of the IPC of the BMV, which has fallen 5.96% so far,” said Antonio Sandoval, a financial analyst, consulted for this article.

“Anyone could think that the company and the stock are experiencing bad times, but this could be a perception that is somewhat far from reality for those who do not know the strategic thinking of the holding company’s president for life, Carlos Slim, because América Móvil invests in the long term , positioning itself in sectors and niches that it considers to have exponential growth in the future and the recent spin-off of Sitios Latam will confirm the historical trend of the consortium”, added Sandoval.

Latam Sites today averages a value of 9.20 pesos per share, above the historical minimum of 8.40 pesos per share. And América Móvil maintains a market capitalization of 1.14 trillion pesos on the BMV.

The rises and falls in the stock were also significantly repercussions originated by those subsidiaries that reported little profit to its parent: the telecommunications businesses for the mass market in Chile and Panama, and the infrastructure arm, today called Sitios Latam.

As an example, the day after the Panamanian antitrust authority authorized América Móvil to sell its local business unit to the operator Liberty Latin America, AMX shares gained eight cents and on July 6 the value of the shares returned to touch the 20 peso mark.

América Móvil is a company that does not know how to lose, because after October 8, when it had the opportunity to merge its loss-making mobile business in Chile with the operation of the cable company VTR, also owned by Liberty, its share rose to 16.81 pesos, which in turn it was the best positive mark after the drop in September.

Panama and Chile meant financial problems for the company at the holding level. In Chile, América Móvil was at risk of becoming the fourth operator in the local market due to the exponential growth of Wom and was never able to surpass Movistar and the leader Entel. Still in 2021, Claro Chile had a net loss of 77 million dollars and its ARPU, measured in dollars, had gone from 9 dollars in 2017 to 5.6 dollars in 2021.

In Panama, América Móvil found it difficult to compete with Tigo and decided to transfer to Liberty a business valued at 160 million in annual revenue and with close to 800,000 mobile customers. There, in Panama, Telefónica Movistar had already left before, leaving that business unit to Tigo for a payment of 650 million dollars. And Digicel also left Panama due to the impossibility of competing with the new Liberty and Tigo.

The detachments of the businesses in Panama, the merger in Chile and the spin-off of Sitios Latam add to the opportunities that the company identifies to continuously report dividends to its shareholders, hence the sale semesters before of TracFone to Verizon in the United States.

“América Móvil has an enormous natural ability to identify opportunities in the market (…) It quickly gets rid of everything that does not generate business. Sold TracFone, spun off the infrastructure division, merged the operation, and sold and merged other businesses in Central America; and compete by investing with a solid treasury. For this reason, today it has one of the best ranked and valued shares by investors due to this stability”, said Jorge Fernando Negrete, president of DPL Group.