Carlos Slim’s Mobile Empire, America Movil, Faces Breakup

Only days after being named the wealthiest man on the globe by Forbes, Mexican business mogul Carlos Slim Helu risks losing much of his income.

Mexican lawmakers announced legislation early this week designed to rein in the country's telecommunications monopolies, which could well lead to a breakup of Slim's Mexico City-based America Movil, the world's fourth largest telecommunications network in the world.

Analysts compare the possible dismantling of his company to the 1984 breakup of AT&T Corp. in the U.S.

Known back then as "Ma Bell," AT&T was split into regional carriers after a Justice Department antitrust suit. Many of those so-called Baby Bells later merged back together as the growth of mobile-phone industry changed the dynamics of the market.

The bill, which will be presented in Mexico's congress, looks to create a new agency with the power to regulate competition in the phone and broadcasting industries, said Gerardo Ruiz Esparza, minister of communications and transportation. The government says it wants to unsure more competition in the $30 billion Mexican communications industry, which is dominated by a handful of people.

Depending on how the bill is worded, Grupo Televisa SAB (TLEVICPO), which holds 70 percent of Mexico's broadcast-TV audience, could also be affected.

"This is one of the bigger threats we've seen for America Movil from a regulatory standpoint," analyst Chris King of Stifel Nicolaus & Co. in Baltimore told Bloomberg News. "It certainly could be the beginning of some type of significant change for the industry itself, particularly if you get regulators with real teeth."

President Enrique Pena Nieto took time during an event yesterday to confirm his support for the bill.

Lack of competition "reduces productivity in Mexico, limiting its capacity to grow and generate better-paying jobs," Nieto sais "This reform allows growth possibilities. But to achieve this, companies will have to invest and innovate, offer better prices and improve their quality of service."

News of the government's imminent action saw America Movil stock fall 3.3 percent to 13.15 pesos yesterday, the lowest price since July 13, 2009. It dropped an additional 2.4 percent after Credit Suisse Group AG downgraded the stock to neutral from the equivalent of a buy.

Meanwhile, America Movil said in a statement it looked forward to "the opening of a new stage in the development of the sector" which it hoped would be "focused on greater investments and innovation."

The company didn't directly address its threatened breakup.

Yesterday's stock decline took a chuck from Slim Helu's wealth. His net worth fell $756 million to $72.1 billion, according to the Bloomberg Billionaires Index.