America Movil bows to regulatory pressure in Mexico

America Movil bows to regulatory pressure in Mexico

09 JUL 2014

Mexico’s government, intent on making the country’s telecom sector more competitive, took an enormous stride towards achieving that goal after America Movil announced its decision to reduce national market share below 50 per cent through the sale of assets.

America Movil, owned by billionaire Carlos Slim, has been under growing pressure since the new and emboldened telecoms regulator – IFT – declared the operator a “preponderant economic agent” and eligible for tougher rules to curb its dominance.

The decision by America Movil comes at a time when the lower house of Congress is debating approval of so-called secondary laws that would give IFT the power to break up players identified as dominant.

America Movil has a 70 per cent share of the mobile market through Telcel, and an 80 per cent chunk of the fixed-line market through its Telmex operation.

By reducing its share below 50 per cent, America Movil wants to avoid the heavy hand of regulation and is seeking assurances this will be the case.

It’s not clear which assets America Movil intends to offload. In a statement, however, the operator said any buyer would need telecoms experience and have “sound economic and technical resources” to participate in what is a capital intensive sector.

In a sideswipe no doubt directed at the country’s regulator, and prompted perhaps by a feeling that its contribution to Mexico’s economy has not been quite appreciated by President Enrique Pena Nieto’s reformist government, America Movil said the asset sale conditions were necessary “to overcome the obstacle of the insufficient investment made by our Mexican competitors”.

America Movil also pledged to separate out the operation of Telcel’s passive infrastructure, including towers and cell sites. The new company would then work with all interested parties in Mexico, including Telcel.

The operator renounced too its option to buy a majority stake in satellite television company Dish Mexico.

Author

Ken Wieland

Ken has been part of the MWC Mobile World Daily editorial team for the last three years, and is now contributing regularly to Mobile World Live. He has been a telecoms journalist for over 15 years, which includes eight...More

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