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August 15, 2005

America Movil continues South American expansion

The battle for supremacy of the South America mobile market has intensified after Mexican mobile operator America Movil SA purchased the number-two ranked mobile operator in Peru. It is the operator's third purchase in South America in as many months.

By CBR Staff Writer

America Movil is Latin America’s largest mobile operator in terms of customers, and the acquisition of the Peruvian operator TIM Peru SAC for 407m euros ($503m) from Telecom Italia SpA, will add at least 1.4 million clients to America Movil’s already huge subscriber base of 75 million in the Americas.

America Movil has operations in more than a dozen countries in the region, stretching from the US to Argentina. It is also thought to be targeting moves into Venezuela, Panama, and Bolivia.

The South American market seems to be mirroring that of western Europe, which is undergoing a wave of consolidation. Unlike Europe however, there are two regional superpowers battling for supremacy. Mexico-City based America Movil is owned by Mexican billionaire Carlos Slim, the region’s wealthiest tycoon. His company is locked in an intense battle with Spain’s Telefonica SA. The sheer size and domination of these two players is putting the squeeze on the region’s third-placed operator Telecom Italia.

Telecom Italia, which still has businesses in Brazil, Argentina, Cuba, Bolivia, and Paraguay, could be the last major international telephone company to leave Latin America. The South American market used to have a number of foreign telecommunication companies including Verizon Communications Inc, BellSouth Corp, and AT&T Corp. However, these giants have pulled out of Latin America in recent years in order to refocus on their domestic markets.

The sale of its Peruvian unit is the second divestiture in South America this year by Telecom Italia, which will gain 110m euros ($136m) and reduce debt by about 400m euros ($494m). In March, Telecom Italia sold control of its Chilean unit to a local company for 716m euros ($885m) in cash.

Earlier this month, America Movil paid $472m for the number-three-ranked Chilean operator Smartcom SA from Spanish company Endesa Participadas SA. Smartcom added approximately 1.7 million wireless subscribers to America Movil’s 75 million customers. In July America Movil closed the acquisition of Hutchison Telecommunications Paraguay SA.

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