Carlos Slim’s América Móvil plans to begin trading shares in tower spinoff Telesites on the Mexican Stock Exchange on 21 December, having finally secured regulatory approval. Surpassing American Tower as the country’s leading towerco, the spun off group may become a target for the likes of American Tower and SBA, an analyst has said.
Carlos Slim’s América Móvil (BMV:AMX) plans to begin trading shares in tower spinoff Telesites on the Mexican Stock Exchange on 21 December, having finally secured regulatory approval. Surpassing American Tower as the country’s leading towerco, the spun off group is likely to become a target for the likes of American Tower and SBA, an analyst has said.
América Móvil shareholders approved the spinoff in mid-April in response to regulatory measures to reduce its dominance in the local telecoms market. The newly-created towerco, Telesites, which has 10,800 masts, was initially expected to go public in June, but this was postponed pending regulatory approvals.
Mexico’s National Securities and Banking Commission authorised the listing yesterday, América Móvil said in a statement.
Shareholders will be entitled to one Telesites share for each América Móvil share they own.
Telesites’ debut on the stock exchange will mark the conclusion of the spinoff process, at which point the towerco will begin operating independently.
América Móvil will shift Ps20.6bn (US$1.3bn) of debt into Telesites, initially in the form of a loan. It will also move Ps2bn (US$130m) of cash into the towerco.
New Street Research has valued Telesite’s equity at US$2.4bn and the enterprise at US$3.6bn, based on its own forecasts.
Telesites will become Mexico’s largest towerco, surpassing American Tower. New tenants will be offered the same rental price as América Móvil’s wireless unit Telcel. CEO Daniel Hajj told investors during an October conference call that there are no current plans to expand Telesites’ footprint to other parts of Latin America, although it be a possibility in future.
Likely target for US telcos
There has been speculation that Telesites could become a target, perhaps for US towercos.
New Street analyst Spencer Kurn told TelecomFinance that the towerco is uniquely positioned to benefit from network investment.
“We believe carriers in Mexico need to more than double their cell sites to meet rising demand over the next five to 10 years, and with a portfolio of towers in the best locations with very few tenants, Telesites is poised to be the fastest growing tower company globally.”
As such, he predicts it will be a very attractive target for both American Tower and SBA Communications, although he doesn’t think Slim is a likely seller at present.
América Móvil has come under significant pressure from telecoms regulator IFT to divest assets and share network infrastructure to boost competition in the fixed and mobile markets and attract foreign investments. In response, the telco has also inked MVNO deals with local fixed-line operator Axtel and Grupo Elektra’s Telecomunicaciones 360.
América Móvil reported a Q3 2015 loss of Ps2.88bn (US$) – its first quarterly loss since 2011 – and net debt of US$42.18bn. It said it expects the Telesites spinoff to reduce its debt by Ps21bn (US$1.27bn). The company has been affected by depreciations in Latin American currencies as well as last year’s domestic telecoms reforms aimed at reducing its dominance.