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Follow-up: Telmex Reports Fourth Quarter Results



February 08, 2008 – Comments (1) | RELATED TICKERS: TMX.DL2

The other international spin-off play that I am invested in right now (besides Altria - PMI International) is Telmex.  The company announced plans late last year to spin-off its international operations.  Telmex is scheduled to publish its fourth quarter results this morning.  The conference call is not scheduled until 10:00 AM Eastern time and I haven't seen an official press release yet, but I did come across a Reuters article that has a brief summary of the results.  At first glance, they don't look very good.  Telmex's earnings for its Mexican operations dropped 11% during the quarter.  However, here's the good stuff.  The company's international operations, which I am really after, reported fourth quarter earnings of 1.986 billion pesos versus a loss of 638 million pesos during the same period last year.  At first glance, these results look tremendous.  

I can't wait until the International operations get separated from the core Mexican operations.  Hopefully the dismal results that the company is experiencing in Mexico won't pull my current position in the company down too much.  It's always difficult to tell whether one should purchase a position in a company that is going to be spun off prior to or following the transaction.  The skeptical part of me wonders if Telmex's Mexican results were really this bad or if they were trying to make them look as bad as possible right now with the Mexican government's antitrust regulators investigating them.  They can say, hey how you want to force us to lower our Mexican phone rates and interconnection fees when we aren't even making money as it is?  Hmmmmm.

While I am in love with Telmex's international operations, I can go either way on its Mexican operations.  If the company receives a favorable ruling in the antitrust investigation that enables them to begin offering television in Mexico without lowering its fixed line rates much the company definitely becomes more attractive.  Furthermore, it is possible that Telmex stock will fall so much after the spin-off that it may become a value play.

I'm looking forward to finding out more information on the results and the spin-off during the conference call and when I can find an official press release.

Long TMX

1 Comments – Post Your Own

#1) On February 08, 2008 at 8:12 AM, TMFBent (99.22) wrote:

thanks for reminding me to look at this one, Deej.


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