In Brief: Citi Might Have to Sell Banamex Venture

Bloomberg News

MEXICO CITY — Buying Grupo Financiero Banamex-Accival SA would leave Citigroup Inc. with a long-distance phone company it might be forced to sell.

Avantel SA, a joint venture with WorldCom Inc., is 55% owned by Banamex, which Citigroup offered to buy on May 17 for $12.5 billion. According to Mexican law, only nationals may control a majority stake in long-distance phone companies.

“It doesn’t put the deal at risk, but it is a challenge and a problem,” said consultant Javier Lozano, a former Mexican under secretary of communications, in a radio interview with Formula Financiera.

Citigroup spokeswoman Christina Pretto said the company will talk to WorldCom to evaluate the situation. Banamex’s stake in Avantel itself may be worth as much as $500 million, and Citigroup may want to get out of the phone business and recoup some of its outlay.