President Enrique Peña Nieto has put his signature to a new law designed to overhaul Mexico’s telecoms and broadcast sectors by boosting competition and curbing market power exerted by dominant players such as Carlos Slim’s America Movil.
A new regulatory body, Ifetel, is in charge of granting and revoking telecoms and media concessions.
Moreover, Ifetel has the power to classify any company with more than 50 per cent share of the market as being dominant, enabling it to force those companies to sell assets.
America Movil has around 70 per cent market share in the mobile market (and an even greater 80 per cent market share of the fixed market).
Whether the new regulator would order a breakup of America Movil is still open to debate. Analysts at Moody’s Investors Service, quoted by the Wall street Journal (WSJ), said that they expect asset sales would be a last resort “in the case of operators that resist the pro-competitiveness decisions of the new regulator”.
By signing an overhaul in the constitution, WSJ reports that Peña Nieto has set the wheels in motion for Congress to draw up and approve “secondary legislation”, which it has six months to complete.
According to WSJ, Peña Nieto said that the scope and spirit of the constitutional changes, which seek to give Mexicans access to better and less-costly telecommunications services and raise competitiveness in Mexico, should be reflected in the secondary laws.
America Movil has apparently declined to comment on the possible effects of the changes until secondary legislation is in place, although it has already acknowledged in a regulatory filing that Mexico’s newly-adopted telecoms legislation threatens to have a significant impact on its business.
However, with the possibility of America Movil entering the country’s pay-TV market for the first time – the law also envisages a reduction in broadcaster Televisa’s dominance – some analysts have speculated that America Movil might benefit overall from Peña Nieto’s reforms.