Investing in Mexican Mobile Growth (AMX; ETF EWW; CEFs MXF, MXE)

Reuters reports that the telecom sector grew 21.5% in 2005. This represents a small slowdown compared with 2004's 22.6%, but 7X the growth of the Mexican economy. The key driver for telecom growth in Mexico was mobile communications which accounted for 71% of the industry growth: Mexico had 47.5 million mobile subscribers at the end of 2005, with traffic up 35% over 2004. Penetration is now 46%, compared with 14% in 2000.

Carlos Slim, the world's third richest man, owns the two key telecom plays in Mexico, Telmex (TMX) and America Movil (AMX).

America Movil Profile (from WSJ):

As of December 31, 2004, it had 61.1 million subscribers in 11 countries. On an equity basis (representing America Movil's economic interest in its subsidiaries' subscribers), the Company had 60.6 million subscribers as of December 31, 2004. A substantial majority of America Movil's wireless subscribers are prepaid customers. It also had approximately 1.9 million fixed lines in Guatemala, Nicaragua and El Salvador at December 31, 2004. The Company has also deployed or upgraded global system for mobile communications (GSM) networks in Mexico, Brazil, Colombia, Ecuador, Guatemala, El Salvador, Nicaragua, Argentina, Uruguay and Honduras. As of August 2004, America Movil acquired Empresa Nicaraguense de Telecomunicaciones, S.A. (ENITEL).

Financial Highlights:

Last year revenue: $17 billion, up 30.83% over 2004

Current market cap: $61.63 billion

P/E: 20.87; P/E vs industry: 96.52%

Consensus earnings estimates current quarter: $0.39

Consensus earnings estimates current fiscal year: $1.67

Five Year Price Performance Compared With Industry

Mexico Funds
There are three funds that cover Mexico which vary in their telecom exposure:
ETF iShares MSCI Mexico Index Fund (EWW) has the greatest exposure to telco services (40.83%); 25% of the fund tracks AMX. It is also the best performing of the three over the last five years.
CEF Mexico Fund (MXF) has 26.6% invested in communications; AMX is 12.85% of the fund.
CEF Mexico Equity and Income Fund (MXE) has 16.82% invested in communications; 12% in AMX.

The chart below compares the monthly performance of the three Mexico funds over the last five years: