Carlos slim slims Mexican telecom presence

Carlos Slim slims Am茅rica M贸vil’s presence after new Mexican legislation stipulates that no company is allowed to have a 50%+ share of the national market. The world鈥檚 second richest man says he will bring his empire鈥檚 market share below the new ceiling.

Am茅rica M贸vil, owned by Slim, controls:

  • 70% of the mobile market through Telcel, and
  • 80% of the fixed line market through Telmex.

Under the new legislation, which is expected to sail through Congress this week, Slim鈥檚 company will have to share infrastructure with Madrid-based Telefonica and other rivals.

In March, 2014, the Mexican telecom regulator declared Am茅rica M贸vil dominant in fixed-line and mobile telecom and imposed measures including slashing interconnection rates that Telcel charges rivals to complete calls, as well as making the monopoly share its network.

When the new legislation is passed in Congress, mobile interconnection rates will be reduced to zero and domestic long-distance charges will be phased out.

Telmex is now no longer allowed to add TV to its telephone and broadband offerings, while other cable operators can offer TV, phone and broadband as one package.

Carlos Slim slims Mexican presence

Carlos Slim, through聽Am茅rica M贸vil and its subsidiaries Telcel and Telmex, dominates Mexico’s telecoms market.

Pe帽a Nieto’s more competition pledge

The new law was introduced by President Enrique Pe帽a Nieto, who took office in December 2012. He pledged to bolster competition in the Mexican economy.

In a move to avoid breaking the new law, Am茅rica M贸vil says it will present its restructuring plan to the Instituto Federal de Telecomunicaciones (IFT), the new telecoms watchdog.

Am茅rica M贸vil is likely to split its infrastructure business and cellphone towers into separate entities.

There is some good news for Am茅rica M贸vil. As soon as its market share falls below 50%, it will then be allowed to compete in other markets, such as pay-TV, something it is not currently allowed to do.

Televisa must reduce market share

Televisa, the largest provider of Spanish-language content worldwide, will also be affected. It has over 60% of the Mexican free-to-air TV market.

Mexico鈥檚 Ministry of Telecommunications and Transportation (Secretar铆a de Comunicaciones y Transportes) announced today that Am茅rica M贸vil informed the Mexican Stock Exchange of its decision to sell off certain assets to a new independent operator in order to reduce its market share to below 50%.

The Ministry of Telecommunications and Transportation wrote:

鈥淭he Ministry believes its new legislation may transform the conditions for competition in the telecoms sector, resulting in superior quality and better prices for end users.鈥

鈥淭he Federal Telecommunications Institute will evaluate Am茅rica M贸vil plan.鈥

Am茅rica M贸vil confirms divestment plans

Am茅rica M贸vil wrote in a press release:

“Am茅rica M贸vil informs that its Board of Directors, at its ordinary meeting held today, after having analyzed several alternatives and recommendations presented by the Strategic Committee, resolved to authorize measures to reduce its national market share in the Mexican telecommunications market under fifty percent in order to cease being a ‘preponderant economic agent,’ under the terms of the Constitution of the United Mexican States and its implementing legislation.鈥

鈥淭he Board of Directors of Am茅rica M贸vil decided upon the sale of certain assets to a new and solid carrier independent of Am茅rica M贸vil, with experience in the telecommunications sector, with sound economic and technical resources, being a real option to participate in this capital-intensive sector, to overcome the obstacle of the insufficient investment made by our Mexican competitors.鈥

Regarding the planned sales, the company gave no time frame.

According to Mr. Slim鈥檚 company, rival firms have had difficulties in competing effectively because of their lack of investment. Am茅rica M贸vil has the most advanced technology because it has invested heavily in Mexico and Latin America, the company claims.These investments have resulted in important and continuous productivity increases which have been passed on to our clients,” it added.

In June, Carlos Slim agreed to acquire AT&T鈥檚 Am茅rica M贸vil鈥檚 stake as the US giant moved to avoid a conflict of interest after acquiring DIRECTV, a competitor of聽Am茅rica M贸vil in Latin America.

Video – Am茅rica M贸vil to cut its Mexican market share