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Overview

América Móvil to consolidate its position as the leading wireless services provider in Latin America with the acquisition of BCI’s and SBCI’s interest in Telecom Americas, thereby becoming its single controlling shareholder.

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Overview

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  1. América Móvil to consolidate its position as the leading wireless services provider in Latin America with the acquisition of BCI’s and SBCI’s interest in Telecom Americas, thereby becoming its single controlling shareholder. Equity subscribers of AMX will surpass 26.8 million, of which 25.0 million are located in Latin America and 4.2 million in Brazil. América Móvil will rank as the largest group in Brazil by equity subscribers and the sixth largest worldwide. Initial savings in interest costs likely to exceed US$ 100 million per year after partial refinancing of debt. Credit ratios to remain strong. Overview

  2. Notwithstanding volatility due to elections, Brazil’s economic fundamentals should bring about economic stability Real GDP Growth Balance of Payments US$ bn Current Account Deficit Foreign Direct Investment Inflation 12 months period Fiscal Result % of GDP Primary Surplus Fiscal Deficit

  3. Brazil’s wireless market, the largest in Latin America, has a low penetration rate and a high potential for growth Latin America’s Wireless Penetration as of December 2001 Latin America’s Wireless Subscribers by Country Brazil’s Wirelesss vs Fixed Lines Millions Brazil’s Wireless vs Wireline Penetration Wireline Wireless Source: Pyramid Research Source: Pyramid Research

  4. Rio de Janeiro, Espirito Santo Market Share: 40% Penetration: 28% Telecom Americas’ Interest: 100.0% Brasilia, South-West Region Market Share: 23% Penetration: 18% Telecom Americas’ Interest: 75.4% (1) Interior São Paulo Market Share: 35% Penetration: 17% Telecom Americas’ Interest: 100.0% Rio Grande do Sul Market Share: 31% Penetration: 27% Telecom Americas’ Interest: 76.1% (1) AMX has established a sizable footprint in Brazil, in areas that comprise almost half of the country’s GDP and a third of its population 4.5 million Consolidated Subscribers 45% of GDP 35% of Population TDMA Technology in all Companies Interconnection rates received by ATL are the lowest in all of Brazil, followed by those of Tess. Telet is the fifth lowest among 20 operators. (1) Americel and Telet will reach 81% subject to approval by Anatel.

  5. Synergies of integration have resulted in lower costs. Payroll costs reduced by 21% over 12 months. Procurement arranged in a centralized fashion, with the Brazilian operations benefiting from the economies of scale generated by América Móvil. Integration of various IT systems, with all companies being transported to the same systems platform as ATL. The partial integration of the Brazilian operations has resulted in synergies and brought down costs...

  6. Centralized engineering decisions with a view to maximizing revenues / minimizing CAPEX. Rationalization of CAPEX by reallocating equipment between companies. All treasury and financing decisions are centralized. …and allowed CAPEX to be allocated on the basis of revenue and profit maximization

  7. On March 2000, Telmex purchased a 25% interest in ATL. This investment is passed on to América Móvil at the time of its spin-off from Telmex. Telecom Americas is established on December 1st, 2000, with América Móvil, Bell Canada International (BCI) and SBC International (SBCI) as its shareholders. América Móvil and SBCI each contributed its 25% stake in ATL to Telecom Americas. BCI contributed its16% stakes in Americel and Telet. América Móvil’s entry into Brazil was initiated two years ago...

  8. In April 2001, Telecom Americas acquired from Telia and Algar a 100% economic interest in Tess. In March 2001, Telecom Americas agreed to acquire the interests in Americel and Telet held by TIW, Opportunity and various pension funds, which together represented a 65% interest in each of the companies. In May 2001, América Móvil acquired directly from Williams Communications a 41% interest in ATL. In February 2002, América Móvil contributed its direct 41% interest in ATL, together with US$ 80 million to Telecom Americas in exchange for the latter’s interest in Colombian wireless company Comcel. …and will result in América Móvil becoming the largest group in Brazil by equity subscribers

  9. América Móvil to pay US$ 366 million for 39.1% of Telecom Americas and to exercise its call option (which does not involve any cash payment) on SBCI’s 11.1% interest in Telecom Americas, bringing its stake to 93%. América Móvil will initially refinance approximately US$ 300 million of short term debt of Telecom Americas. Consolidated debt of América Móvil and Telecom Americas to end the year at approximately US$ 4.2 billion. Debt / EBITDA and EBITDA / Interest payments ratios will remain within investment grade range. América Móvil’s interest in Telecom Americas will increase to 93%, which will result in AMX consolidating Telecom Americas

  10. América Móvil will capitalize on the growth opportunities presented by its Brazilian operations 2001 2005E Subscribers (millions) 4.3 7.3 Net Revenues (millions US$) 778 1,285 EBITDA (millions US$) 168 489 EBITDA Margin (% of Net Revenues) 22% 38% Cumulative CAPEX 2002 - 2005 (millions US$) 880

  11. Brazilian operations to be free cash flow positive in 2003. Initial interest - cost savings of US$ 100 million per year. Substantial tax benefits in Brazil. Lower execution and financing risk. Compound annual EBITDA growth rate of 31% in 2001 - 2005. Several financial benefits will be immediately obtained from the consolidation of Telecom Americas

  12. América Móvil will consolidate its position as the main wireless player by equity subscribers in Brazil Brazilian Equity Subscribers as of March, 2002 Millions

  13. The Brazilian subscribers will account for 16% of América Móvil’s total subscriber base América Móvil’s Wireless Subscribers As of March, 2002 (000’s) Country Total Equity U.S.A. Mexico 17,898 17,898 Brazil 4,503 4,188(1) Colombia 2,089 1,997(2) U.S.A. 1,893 1,851 Ecuador 546 440(3) Guatemala 460 434 Total 27,389 26,808 (1) Considering AMX’s stake of 93% (2) Considering AMX’s stake of 96% (3) Considering AMX stake of 81%

  14. Low wireless penetration in a country with over 140 million inhabitants. Significant growth potential. Summary Increasing presence in a strategic market • Savings derived from operational synergies. • Lower cost of funding which saves US$ 100 million per year in interests. Significant savings derived from consolidation • Improves América Móvil’s earnings potential. • Consolidates América Móvil as the largest cellular player in Latin America. Consolidation of América Móvil’s growth profile Improved operations and capital structure of TA will strenghten AMX’s position as the leading wireless company in Latin America

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