Transcript América Móvil

Overview
 América Móvil to consolidate its position as the leading
wireless services provider in Latin America with the
acquisition of BCI’s and SBCI’s interest in Telecom
Americas, thereby becoming its single controlling
shareholder.
 Equity subscribers of AMX will surpass 26.8 million, of
which 25.0 million are located in Latin America and 4.2
million in Brazil.
 América Móvil will rank as the largest group in Brazil by
equity subscribers and the sixth largest worldwide.
 Initial savings in interest costs likely to exceed US$ 100
million per year after partial refinancing of debt.
 Credit ratios to remain strong.
AM-1
Notwithstanding volatility due to elections, Brazil’s economic
fundamentals should bring about economic stability
Real GDP Growth
US$ bn
40
35
Current Account Deficit
30
25
20
15
Foreign Direct Investment
10
2002/f
Apr-02
Oct-01
Jan-02
Jul-01
Apr-01
Oct-00
Jan-01
Jul-00
Apr-00
Jan-00
Jul-99
Oct-99
Apr-99
Jan-99
2002/f
2001
2000
1999
1998
1997
-10%
Oct-98
Fiscal Deficit
-8%
Jul-98
-6%
Apr-98
-4%
Oct-97
-2%
Jan-98
0%
Jul-97
2%
10%
9%
8%
7%
6%
5%
4%
3%
2%
1%
0%
Apr-97
Primary Surplus
Jan-97
12 months period
% of GDP
4%
-12%
2001
Inflation
Fiscal Result
6%
2000
1999
1997
2004E
2003E
2002E
2001
2000
1999
1998
0
1998
5
1997
5%
5%
4%
4%
3%
3%
2%
2%
1%
1%
0%
Balance of Payments
AM-2
Brazil’s wireless market, the largest in Latin America, has a low
penetration rate and a high potential for growth
Latin America’s Wireless Penetration
Latin America’s Wireless
Subscribers by Country
as of December 2001
35%
30%
Other
31%
Brazil
33%
25%
20%
15%
10%
5%
0%
Colombia
Brazil’s Wirelesss vs Fixed Lines
Fixed Lines
Source: Pyramid Research
Chile
2006/f
0%
2005/f
5%
2004/f
0
2003/f
10%
Venezuela
Wireless
2002/f
10
Mexico
Wireline
2001
15%
Argentina
Brazil’s Wireless vs Wireline Penetration
1998
20
2006/f
20%
2005/f
30
2004/f
25%
2003/f
40
2002/f
30%
2001
50
2000
35%
1999
60
1998
40%
1997
70
1997
Millions
Brazil
2000
Mexico
25%
1999
Colombia/
Guatemala/ Ecuador
11%
Wireless Subscribers
Source: Pyramid Research
AM-3
AMX has established a sizable footprint in Brazil, in areas that
comprise almost half of the country’s GDP and a third of its population
4.5 million Consolidated Subscribers
45% of GDP
35% of Population
TDMA Technology in all Companies
Brasilia, South-West Region
Market Share: 23%
Penetration: 18%
Telecom Americas’ Interest: 75.4% (1)
Rio Grande do Sul
Market Share: 31%
Penetration: 27%
Telecom Americas’ Interest: 76.1% (1)
Rio de Janeiro, Espirito Santo
Market Share: 40%
Penetration: 28%
Telecom Americas’ Interest: 100.0%
Interior São Paulo
Market Share: 35%
Penetration: 17%
Telecom Americas’ Interest: 100.0%
Interconnection rates received by ATL are the lowest in all of Brazil, followed by those of
Tess. Telet is the fifth lowest among 20 operators.
(1) Americel and Telet will reach 81% subject to approval by Anatel.
AM-4
The partial integration of the Brazilian operations has resulted in
synergies and brought down costs...
 Synergies of integration have resulted in lower costs.
 Payroll costs reduced by 21% over 12 months.
 Procurement arranged in a centralized fashion, with
the Brazilian operations benefiting from the
economies of scale generated by América Móvil.
 Integration of various IT systems, with all companies
being transported to the same systems platform as
ATL.
AM-5
…and allowed CAPEX to be allocated on the basis of revenue
and profit maximization
 Centralized engineering decisions with a view to
maximizing revenues / minimizing CAPEX.
 Rationalization of CAPEX by reallocating equipment
between companies.
 All treasury and financing decisions are centralized.
AM-6
América Móvil’s entry into Brazil was initiated two years ago...
 On March 2000, Telmex purchased a 25% interest in
ATL. This investment is passed on to América Móvil
at the time of its spin-off from Telmex.
 Telecom Americas is established on December 1st,
2000, with América Móvil, Bell Canada International
(BCI) and SBC International (SBCI) as its
shareholders.
 América Móvil and SBCI each contributed its 25%
stake in ATL to Telecom Americas.
 BCI contributed its16% stakes in Americel and Telet.
AM-7
…and will result in América Móvil becoming the largest group in
Brazil by equity subscribers
 In April 2001, Telecom Americas acquired from Telia
and Algar a 100% economic interest in Tess.
 In March 2001, Telecom Americas agreed to acquire
the interests in Americel and Telet held by TIW,
Opportunity and various pension funds, which
together represented a 65% interest in each of the
companies.
 In May 2001, América Móvil acquired directly from
Williams Communications a 41% interest in ATL.
 In February 2002, América Móvil contributed its direct
41% interest in ATL, together with US$ 80 million to
Telecom Americas in exchange for the latter’s interest
in Colombian wireless company Comcel.
AM-8
América Móvil’s interest in Telecom Americas will increase to
93%, which will result in AMX consolidating Telecom Americas
 América Móvil to pay US$ 366 million for 39.1% of
Telecom Americas and to exercise its call option
(which does not involve any cash payment) on
SBCI’s 11.1% interest in Telecom Americas, bringing
its stake to 93%.
 América Móvil will initially refinance approximately
US$ 300 million of short term debt of Telecom
Americas.
 Consolidated debt of América Móvil and Telecom
Americas to end the year at approximately US$ 4.2
billion.
 Debt / EBITDA and EBITDA / Interest payments
ratios will remain within investment grade range.
AM-9
América Móvil will capitalize on the growth opportunities
presented by its Brazilian operations
2001
Subscribers (millions)
2005E
4.3
7.3
Net Revenues (millions US$)
778
1,285
EBITDA (millions US$)
168
489
EBITDA Margin (% of Net Revenues)
22%
38%
Cumulative CAPEX 2002 - 2005
(millions US$)
880
AM-10
Several financial benefits will be immediately obtained from the
consolidation of Telecom Americas
 Brazilian operations to be free cash flow positive in
2003.
 Initial interest - cost savings of US$ 100 million per
year.
 Substantial tax benefits in Brazil.
 Lower execution and financing risk.
 Compound annual EBITDA growth rate of 31% in
2001 - 2005.
AM-11
América Móvil will consolidate its position as the main wireless
player by equity subscribers in Brazil
Millions
4.5
Brazilian Equity Subscribers as of March, 2002
4.2
4.0
3.6
3.5
3.0
2.6
2.5
1.8
2.0
1.5
1.2
1.0
0.5
0.0
América Móvil
TEM
PT
TIM
Bell South
AM-12
The Brazilian subscribers will account for 16% of América
Móvil’s total subscriber base
América Móvil’s Wireless Subscribers
(000’s)
As of March, 2002
Country
Total
Equity
U.S.A.
U.S.A.
7%
Mexico
17,898
Brazil
4,503
4,188(1)
Colombia
2,089
1,997(2)
U.S.A.
1,893
Ecuador
546
Guatemala
Total
17,898
1,851
440(3)
460
434
27,389
26,808
Brazil
16%
Colombia
8%
Ecuador
2%
Mexico
65%
Guatemala
2%
(1) Considering AMX’s stake of 93%
(2) Considering AMX’s stake of 96%
(3) Considering AMX stake of 81%
AM-13
Summary
Increasing presence
in a strategic market
 Low wireless penetration in a country with over
140 million inhabitants.
 Significant growth potential.
Significant savings
derived from
consolidation
Consolidation of
América Móvil’s
growth profile
 Savings derived from operational synergies.
 Lower cost of funding which saves US$ 100
million per year in interests.
 Improves América Móvil’s earnings potential.
 Consolidates América Móvil as the largest
cellular player in Latin America.
Improved operations and capital structure of TA will strenghten AMX’s position as
the leading wireless company in Latin America
AM-14