The spin-off proposal, approved today by TELMEX’s board of directors, will create two companies whose highly focused management teams can more quickly and efficiently capitalize on emerging opportunities and challenges that may arise in their respective markets.
The spin-off is subject to approval by shareholders and several governmental authorities
TELMEX’s board of directors determined that the spin-off would help increase operating and financial efficiency of both companies.
America Movil will be created via a spin-off transaction which, based on the advice of TELMEX’s counsel, should be tax-free for the company’s shareholders. TELMEX shareholders will receive an equivalent number of America Movil shares.
TELMEX will continue to be a Mexican provider of integrated telecommunications services with the best technology that allows it to deliver the highest quality of services to its customers. TELMEX expects to emphasize its Internet strategy, which includes the Hispanic T1msn.com Portal and other initiatives related to the data services such as e-commerce and Internet Data Centers.
After the spin-off, TELMEX will maintain a solid financial position that will allow it to continue investing in technology enhancements, expand its market and sustain growth and development of products and services for the Mexican market.
America Movil will be Latin America’s largest cellular communications provider, with more than 9.9 million cellular subscribers. Based in Mexico City, America Movil, will consist of the cellular business in Mexico and most of the international investments that TELMEX has made during the last few years, including recent acquisitions in South America.
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With the spin-off, TELMEX’s financial position will strengthen with better and more stable results unaffected by the new international businesses that, due to their growth and maturity stage, require important amounts of resources said Carlos Slim, chairman of the board.
TELMEX will continue to have a strong and highly qualified labor force by providing permanent training to its personnel in new technologies that will increase services offered to its customers.
With this spin-off, America Movil will have more flexibility to continue its dynamic expansion through associations, alliances and mergers as well as entering the capital markets Mr. Slim concluded.
On a pro forma basis, TELMEX estimates that for the first six months of 2000 America Movil would have had revenues of approximately 11,793 million pesos, EBITDA of approximately 3,146 million pesos and net income of 154 million pesos, that only would represent 1.4% of TELMEX’s consolidated net income.
