MEXICO CITY Shares in Carlos Slim's flagship telecommunications firm America Movil (AMXL.MX) jumped on Thursday, helped by bets that a potential entry into the pay TV market would help keep his empire profitable despite tougher regulations.
America Movil shares rose by the most in 11 months even as Mexican lawmakers prepared to vote on a sweeping telecom bill that could undermine the company's dominant position in domestic phone and Internet markets.
The proposed regulations would give Slim a path to finally entering the TV market after trying for years, but he would likely have to cede ground in the fixed-line and mobile phone markets.
The stock was knocked to a 4-year low last week on worries that a new regulator could even move to break up America Movil under proposed powers.
But analysts said expectations that the new bill would pave Slim's way into the pay TV market helped fuel gains on Thursday. Regulators have kept Slim from entering the pay TV market in Mexico, due to his dominance in the telecommunications sector.
"America Movil will end up with more profits than losses (after or due to this bill)," said Gerardo Copca, a strategist at consultancy MetAnalisis in Mexico City. "It will probably be able to participate in television, which it has sought for so long."
America Movil said after the market close that it had won exclusive transmission rights in Latin America for the 2014 winter Olympic games, as well as the 2016 summer games. America Movil is already Latin America's top pay TV provider.
The stock also got a lift this week after America Movil said it wants to significantly boost its share buyback fund.
Later on Thursday, the lower house of Congress is expected to vote on the bill, which has been hailed as the biggest planned shakeup of the closed telecoms industry in decades. If it is passed, the bill would head to the Senate.
America Movil shares rose 4.31 percent to 12.35 pesos. Before the sharp rebound, the stock had lost about a fifth of its value this year due to weak earnings and the threat of tougher regulation.
The government's reform, presented on March 11, aims to foster competition in the telecoms sector by increasing foreign investment and giving regulators the power to force companies with a market share above 50 percent to sell assets.
Slim, the world's richest man, controls about 70 percent of the Mexican mobile phone market and roughly 80 percent of the fixed line business through America Movil. Televisa (TLVACPO.MX) has about 60 percent of the broadcast market and is a leading pay TV operator.
Shares of top Mexican broadcaster Televisa fell 1.52 percent to close at 63.99 pesos. The stock had risen on Wednesday, helped by speculation that lawmakers could soften proposed regulations affecting the company's pay TV business. That is now in doubt.
America Movil is down about 9 percent from its close on March 8, before the government presented its bill, while Televisa is down just over 6 percent.
(Reporting by Michael O'Boyle; Editing by Lisa Von Ahn and Richard Chang)