America Movil (AMX) Can Add Some Spice to Your Portfolio - Barron's (TEF, WMT)
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America Movil S.A.B. de C.V. (NYSE: AMX) is one of the best plays in telecommunications, a Barron's article reports today. America Movil, a spin-off of Telefonos de Mexico in 2000, has been on a blistering rise upward; shares of the ADR moving up 57% to around $49 over the last year.
Much of the positive upswing can be attributed to America Movil's control over the Latin mobile phone market. Latin America,and Mexico in particular, is one of the fastest growing emerging markets, even through the recent recession. America Movil owns more than 70% of that market, far ahead of the 20% owned by Spanish telecom Telefonica (NYSE: TEF). Mexico's GDP has seen a decline of 8% over the last year, but economists are looking for a strong recovery for 2010.
America Movil generated $5 - $7 billion of free cash flow last year.
An HSBC analyst sees the ADR of America Movil reaching $58, noting that there's less regulatory, competitive, and geopolitical threats in Latin America versus the BRIC's.
AMX also recently inked a deal with retail super-giant Wal-Mart (NYSE: WMT) to roll-out their Straight Talk prepaid phone plan.
AMX's Tracfone signed up 712K customers last year, and sees that doubling within five years.
America Movil's balance sheet shows 31% of total capital as net debt, about $7 billion.
One constraint on the company is that 50% of their debt is denominated in dollars. It could face greater obligations if the Brazilian real and Mexican peso continue to depreciate. AMX also has more competition from Telefonica in more mature markets, and may see a tax hike from the Mexican government to offset losses attributed to lost oil revenues. Brazil is also threatening to impose burbs on certain cellphone charges.
America Movil doesn't just rely on the Mexican economy, however, as the company has operations in 18 different companies. With a solid growth strategy and conservative management, AMX could spice up any portfolio.
Much of the positive upswing can be attributed to America Movil's control over the Latin mobile phone market. Latin America,and Mexico in particular, is one of the fastest growing emerging markets, even through the recent recession. America Movil owns more than 70% of that market, far ahead of the 20% owned by Spanish telecom Telefonica (NYSE: TEF). Mexico's GDP has seen a decline of 8% over the last year, but economists are looking for a strong recovery for 2010.
America Movil generated $5 - $7 billion of free cash flow last year.
An HSBC analyst sees the ADR of America Movil reaching $58, noting that there's less regulatory, competitive, and geopolitical threats in Latin America versus the BRIC's.
AMX also recently inked a deal with retail super-giant Wal-Mart (NYSE: WMT) to roll-out their Straight Talk prepaid phone plan.
AMX's Tracfone signed up 712K customers last year, and sees that doubling within five years.
America Movil's balance sheet shows 31% of total capital as net debt, about $7 billion.
One constraint on the company is that 50% of their debt is denominated in dollars. It could face greater obligations if the Brazilian real and Mexican peso continue to depreciate. AMX also has more competition from Telefonica in more mature markets, and may see a tax hike from the Mexican government to offset losses attributed to lost oil revenues. Brazil is also threatening to impose burbs on certain cellphone charges.
America Movil doesn't just rely on the Mexican economy, however, as the company has operations in 18 different companies. With a solid growth strategy and conservative management, AMX could spice up any portfolio.
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