The Mexican government on Monday announced a sweeping proposal to limit the reach of telecoms tycoon Carlos Slim and broadcasting giant Televisa as part of efforts to boost competition in Latin America’s second-biggest economy.
The bill, which forms part of the most ambitious economic reform agenda in a generation, seeks to establish a powerful industry regulator armed with an array of tools to curb companies’ control of markets, while opening up space for new investors.
Experts have long insisted that the abundance of public and private-sector monopolies and duopolies in Mexico hampers competition drives up prices for consumers and reduces overall economic growth.
As part of his modernising reform agenda, centrist President Enrique Peña Nieto of the Institutional Revolutionary Party (PRI), who took office in December, has vowed to triple the country’s annual average growth rate during most of the 2000s to about 6 per cent.
Shares in América Móvil, Mr Slim’s pan-American telecoms provider which controls 70 per cent of the cellular market in Mexico, fell more than 3 per cent on the news. Shares in Televisa, which controls more than 60 per cent of free-to-air broadcasting, fell just under 1 per cent before recovering the lost ground later in the day.
Under the proposal, the new regulator for telecoms and television, to be called the Federal Telecommunications Institute, would be able to classify as “dominant” any company with a more than 50 per cent share of the market.
Such companies could then be subject to a host of sanctions, ranging from so-called asymmetric regulations on pricing to benefit smaller companies, to fines and even forced asset sales.
On broadcasting, the proposal envisages obliging existing television networks to offer their free-to-air programming at no cost to cable operators as well as force television cable companies to carry all channels.
It also seeks to prize open the spectrum for new entrants by creating two new free-to-air television channels, and by raising current limits on foreign ownership of telecoms and television companies.
Surrounded by the heads of all of Mexico’s main parties, who gave their open support to the plan, Mr Peña Nieto said: “We must create incentives for competition in all sectors [of the economy] and modernise our telecommunications.”
Meanwhile, César Camacho, head of Mr Peña Nieto’s PRI, said that the changes would “bring about a true revolution”.
In a statement on Monday afternoon, Televisa, the world’s largest Spanish-language broadcaster, said that it supported the proposals. “For several months, we have been saying that Mexico needs to modernise its telecommunications and broadcasting sectors.”
The company, which has made heavy investments in telecoms in an effort to chip away at Mr Slim’s empire, said it looked forward to competing “on a more level playing field”.
Late on Monday, América Móvil said it welcomed the reform proposal, which it called “a new phase in the development of telecommunications and broadcasting in Mexico”. It added that it supported the increase in limits on foreign ownership in the telecoms sector, describing it as a “necessary factor to increase the financial investment, both domestic and foreign, that the sector requires”.
The company’s shares have fallen about 11 per cent since the start of this year largely on the back of weaker-than-expected results for the last three months of 2012.
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