Net to spin off Todito Card
MEXICO CITY– TV Azteca, Mexico’s second-largest net, brushed aside its mounting legal woes Tuesday to announce a cash payout to stockholders worth $78 million.
The net said also it would spin off its successful prepaid telephone and Internet card business, Todito Card, formerly a unit of lucrative Azteca Web site Todito.com.
Both announcements reinforce the notion that Azteca — which has seen its stock value and reputation dragged down by fraud investigations mounted by the SEC and the Mexican government against topper Ricardo Salinas — is a healthy business with significant growth possibilities.
The financial liquidity indicated by the dividend payout, and the profitability and commercial value, of smaller units such as Todito Card, indicate the company’s overall depth.
The dividend payments are part of a long-term scheme to pay out as much as $500 million to shareholders while reducing debt by roughly $250 million.
The new owner of Todito Card is Universidad CNCI, a Mexican Internet services company that co-founded Todito.com with Azteca and held a 50% stake in the site. Azteca will now be sole owner of Todito.com, which will be consolidated with the net’s site to form Azteca Internet.
Universidad CNCI will control Todito Card.
In 2004 Todito.com generated $12.2 million in sales, according to Azteca’s annual report. Todito Card sales reached $8.8 million. Financial terms of the agreement were not disclosed.
Net, chairman Salinas and two other execs are awaiting trial in U.S. District Court for alleged fraud in a 2003 debt transaction involving Unefon, a telco minority held by Salinas, which netted him $109 million in undeclared profit. Trial is set to begin in July.