UPDATE 7-Telmex foreign spinoff has cash for acquisitions

Creating Telmex Internacional gave investors a choice between a new company that has its eyes on expanding throughout South America and a slower-moving giant that delivers solid profits and dividends.

"Telmex Internacional is the most dynamic part," said Raul Ochoa, an analyst at Scotiabank in Mexico City.

NOT JUST BRAZIL

Brazil, Latin America's largest economy, is by far the biggest market for Telmex Internacional, accounting for 78 percent of revenue, which totaled $6.2 billion in 2007.

But the company sees growth across Latin America, according to Chief Executive Oscar Von Hauske.

"We believe we have other growth opportunities in the other countries because of the levels of penetration we are seeing, but we also believe that Brazil, because of the economy and the penetration, will develop well, too," Von Hauske said.

Ochoa at Scotiabank said Telmex Internacional would likely focus on snatching up small cable operations in the region as it aims to become Latin America's top provider of triple-play packages -- combined services of TV, Internet and phone.

"This is going to take time and it will have to make greater investments," Ochoa said.

Back in Mexico, Telmex has 90 percent of the fixed-line market, and its profits are healthy. But increasing competition has forced it for the past eight years to freeze prices.