MEXICO CITY (Reuters) - Mexican holding company America Telecom, controlled by billionaire Carlos Slim, said on Tuesday it will merge with cellphone giant America Movil, its only asset.

America Telecom (AMTELA1.MX) shareholders will receive 4.07128 shares of America Movil (AMXL.MX) (NYSE:AMX - news) for every one of their own shares, the company said.

America Telecom owns about 41 percent of America Movil.

America Movil, the largest mobile telephone firm in Latin America, said the arrangement would free up 12.5 billion pesos ($1.15 billion) to be put toward share buybacks or dividends without having to pay additional taxes.

America Movil also said the new structure would simplify shareholders' decision-making and investment plans and boost trading volume for its stock.

Shares of America Movil rose 0.55 percent to 23.62 pesos prior to the announcement, while America Telecom was up 1.46 percent to 85.69 pesos.