Telefonos de Mexico SAB to spin off its international operations

Shares in Telefonos de Mexico SAB jumped due to the news that it will spin off its international operations.

Photo: Telefonos de Mexico SAB to spin off its international operations

Telmex shares were up 9 percent to 20.16 pesos around midday, after the telecom announced Wednesday that it would spin off a separate company to handle operations in Argentina, Brazil, Chile, Colombia and Peru. On the New York Stock Exchange, Telmex shares rose 8 percent at US$36.60 (25 EUR).

In a news release Wednesday, Telmex said it expects separating the domestic and international sides of the company "will make each business operate more efficiently" and improve competitiveness.

The company said that domestically, it hopes the spinoff will blunt accusations of monopolistic practices and clarify "the difference between its operations in middle- and upper-class markets, where there is competition, and those of low-income and rural markets, where there is no competition."

Telmex, which controls 90 percent of Mexico's fixed lines, has countered criticism by saying much of its business comes from low-income, rural areas that generate little profit.

The spinoff must be approved by shareholders.