Billionaire Carlos Slim's America Movil's rate of stock buybacks could slow down as acquisitions increase and earnings fall, Bloomberg reported. Citing company filings, the report said that last year the mobile phone company spent over $6.1 billion to buy back stock, with $2.1 billion spent for a repurchase in the fourth quarter alone. The buybacks allowed America Movil to prevent its shares from plunging last year even after over 20% of its stock's value was lost earlier in 2013 due to regulatory threats.
America Movil Chief Executive Officer Daniel Hajj informed investors that the firm is studying acquisitions in Brazil. The South American country is the company's second biggest market, with last quarter's sales growth exhibiting the fastest after two years, the report said.
Sanford C. Bernstein & Co Analyst Robin Bienenstock told Bloomberg that in the next three months, America Movil, Telefonica SA and Oi SA would most likely make a joint offer for the Brazilian unit of Telecom Italia, Tim Participacoes.
Bienestock said in a phone interview, "It's about keeping the share price up. This year that becomes a lot harder if they do go for a Tim Brasil deal." He added that Movil has to significantly lower buybacks "unless they're willing to temporarily move outside of their debt ceiling." This year, shares of America Movil plunged 3.4%. It closed last year with a gain of 2.1%, the report said.
Bloomberg data showed that the company's repurchases undertaken last year lowered its total outstanding shares by 7.1%. This represented the most reduction in at least 10 years, the report said.
In October, Standard & Poor's said that Mexico City-based America Movil would be able to maintain it's A- rating provided that its ratio of fully adjusted debt to earnings does not exceed 2 times. As of September, that ratio stood at 1.7 with the company carrying a $38.9 billion debt and having $5.5 billion in cash, the report said.
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