Net profit at Mexico’s biggest telecom network Telmex rose 10% in the first quarter to $568 million, while revenue jumped 28% to $3.5 billion. The company’s total debts rose 54% to $9.3 billion. Telmex is taking on debt to invest in Brazil and other parts of South America. Revenues from Mexico, where Telmex controls 95% of the market, have stagnated in recent years.
Category: Paywall
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América Móvil Ups Investments
Mexico’s biggest wireless company América Móvil will invest $200 million in Peru this year as part of the company’s expansion throughout South America. América Móvil also says it plans to buy Brazilian wireless telecommunications services provider Telemig Celular Participações. América Móvil is one of the two largest mobile phone operators in Latin America, and competes directly with Spanish wireless telecom provider Telefónica Móviles.
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Brazil: Lending Increases
Brazilian bank lending rose 1.6% in March, the fourteenth straight monthly increase, to $201 billion after rising 1.4% in both February and January. Lending has risen 30% since September 2003 when President Inácio Lula da Silva began a program of payroll loans to make borrowing more affordable by reducing the risk of defaults. The program allows workers to borrow at lower costs because repayments are deducted directly from their wages.
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Cemex Sells Stake in CBB
Mexican cement producer Cemex has sold its 12% stake in Chilean cement producer Cementos Bío Bío (CBB) for about $66 million. Cemex sold its 31.44 million CBB shares on the Santiago Stock Exchange to Santander Investment at the minimum fixed price of $2.08 per share. Cemex has decided to sell non-core assets in order to pay off debt after it completed its purchase of UK ready-mix concrete maker RMC for $5.8 billion in March.
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América Móvil Up Slightly
Mexican cellphone giant América Móvil posted net profit of $407 million for the first quarter, up a disappointing 2% year-on-year. However, revenue was $3.50 billion, up 33% year-on-year. América Móvil, with 66 million subscribers in Latin America, is the leading wireless network in the region.
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Bradesco to Issue Bonds
Banco Bradesco, Brazil’s biggest private sector bank, will sell $1.6 billion worth of 20-year bonds on the domestic market and scale back borrowing overseas. The bank will cut by more than half the $2 billion of bonds it planned to sell on international markets this year. Brazilian companies have boosted domestic bond sales as the fastest economic growth in a decade helps drive demand for local-currency debt. Bradesco’s leasing arm will issue the debt, and use the proceeds to meet increased demand for financing.
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Brazil’s External Accounts Strengthen
Brazil posted a March balance of payments surplus of $3.6 billion, even after making its first payment of the year to the IMF of $1.17 billion. The current account was $1.76 billion in surplus. The current account surplus hit a new record of $12.71 billion in the twelve months through March, equivalent to 2.05% of GDP. Profit and dividend remittances were $661 million, down from February’s $1.35 billion. The capital and financial accounts posted a $1.56 billion surplus. Total private sector debt amortizations were $800 million. FDI flows were $1.4 billion. Gross international reserves climbed to $61.96 billion, or about $38 billion in net terms.
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Chile Posts Trade Surplus
Chile posted a trade surplus of $770 million from April 1 to 15, with exports at $1.97 billion and imports at $1.20 billion. Copper exports stood at $475 million. Chile is the world’s largest copper producer, accounting for one third of global copper output.
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Condoleezza’s Message
Condoleezza Rice is on her first trip to Latin America as secretary of state and she is trying to stress a positive agenda. This is well and good, but Rice has also made it clear that Washington’s main issue with Latin America concerns trade. She wants to revive the moribund Free Trade Area of the Americas, the grand vision of creating a single trading bloc stretching from Alaska to Tierra del Fuego.
That dream will remain a fantasy. Even though free trade would help Latin America grow faster, attract more investment and build more sophisticated societies closely integrated with the emerging global civilization, politicians throughout the hemisphere will keep sabotaging progress. Rice called on Brazil to “reenergize” FTAA but the Bush administration has scarcely lifted a finger to push the far less challenging CAFTA trade pact with Central America through Congress. Business lobbies, labor unions and ignorant nationalists in the US and throughout Latin America have blocked full-blown trade integration at every turn.
That’s the bad news. The less bad news is that a great many Latin American companies now realize that exports are an integral part of their business. Trade is flourishing even without any grand trade pacts. The great challenge for Latin America is to ensure that this positive outlook for trade, investment and growth will survive the Chinese-driven commodity cycle. It would be a tragedy if Latin America resigns itself to being no more than a supplier of base metals and low-value farm goods to China and the rest of the world.
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Condoleezza’s Message (1)
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