The problems related to economic growth are not the only problems which the government of Felipe Calderon must fight. Capital flight is not unique to Argentina and by Prensa Latina, U.S. $ 14.483 million have fled to Mexico during the first half of the year as a result of the crisis and the unreliability in the Mexican economy. Given the weak economy and low inflationary pressures (the rate of retail inflation in Mexico will close by 2009 close to 4.1%), the Bank of Mexico is pursuing a monetary policy less restrictive which has been at the benchmark interest rate at 4.5%, a level too low to sustain the exchange rate and prevent the continuation of capital flight. But despite the Mexican economy is going through problems that hit the population, some companies are betting on growth in the country, as it is with Telefonica (IBEX 35: TEF, NYSE: TEF) to bet the Mexican consumer and is this reason that has expressed interest in participating in the bidding for new mobile frequencies in the country, due in the coming weeks. Mexico is one of the markets in which Telefonica has opted for organic growth.
The strategy of growth in the country, the company does not rule out selective acquisitions to strengthen its market share and increase its ability to compete in a market characterized by the small number of operators. In the Mexican telephone market America Movil (BVM: AMXL; NYSE: AMX) is controlled by Mexican Carlos Slim, who is the biggest operator Mexico’s mobile and has a market share of 72%. Telefonica, is second with 20% market share and intends to aggressively expand the empire pelearle dominance of Slim. Competition is not limited to mobile telephones and that Mexican authorities want to tender this year to expand services wireless frequencies for third generation (3G) and broadband internet as well as part of the fiber optic network managed by the Commission Federal de Electricidad (CFE), segments in which Telefonica is interested in competing. Just as the telecommunications sector offers attractive investment opportunities, Mexico can and must implement reforms necessary for economic diversification both in structure as well as in trade relations. Mexico has a good potential to grow not only outside but also internally doors from the improved social status. These potentials can be transformed into a reality with a highly attractive for investors. a Horacio Pozzo GLOBAL VALUE +20% AS AT 60 Da subscribers of our new investment newsletter, Global Value, not only recovered the cost of the subscription, but you earn 20% in their portfolios by investing in companies that we recommend.
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