Mexican regulators have imposed new regulations on billionaire Carlos Slim’s América Móvil (AMX) designed to boost competition in the domestic telecoms market, including a requirement that it separate some of its infrastructure into separate units, the company said.
The ruling by the Federal Telecommunications Institute (IFT) came after an evaluation of the so-called asymmetric regulations imposed on América Móvil in 2014 after the company was declared to hold a dominant position under a sweeping reform of the sector designed to level the playing field for rival operators.
AMX’s Telmex and Telnor fixed-line business has a 75.7 per cent market share while its Telcel mobile unit had a 65.7 per cent share of the cellphone market domestically in the third quarter last year, according the IFT’s latest report on the telecommunications sector .
AMX, whose margins have been squeezed by the asymmetric regulations, immediately vowed to challenge the ruling.
The company said:
AMX believes that IFT resolution is not based on an integral evaluation in terms of competition, nor does it consider the profound changes in the Mexican telecommunications sector within three years from the imposition of the asymmetric regulations and the effective competition that exists in mobile and fixed services, which is clearly shown, amongst others, by the significant growth in the consumption of telecommunication services, mainly data.
AMX regularly complains that it is effectively subsidising deep-pocketed rivals like AT&T of the US, which aims to grow its market share in Mexico aggressively.
The notified modifications and additions to the regulations violate the concessions and confirm the lack of legal certainty and regulatory predictability in the sector. AMX is currently reviewing the resolution and analysing its possible effects on AMX and its subsidiaries. The resolution will be challenged in accordance with applicable law.
A key modification to the regulations was the IFT’s order for a separation of some business operations, which AMX described as follows:
The IFT ordered the incorporation of a legal entity independent from Telmex-Telnor that will exclusively provide wholesale services related to local loop and shared access and use of passive infrastructure.
All other wholesale services will be provided by a business unit within Telmex-Telnor different from the one that provides telecommunication services to end users. Implementation of the functional separation will be based on a separation plan that will be presented by Telmex-Telnor for IFT approval, under the terms and conditions determined by the IFT.
Mexico’s telecoms reform has delivered a dramatic drop in prices for cellphone users and AMX argues that effective competition now exists and asymmetric regulations are redundant.
The IFT’s ruling came after it found that Mexico’s biggest broadcaster Televisa held a dominant position in the pay television market that could curb competition, and said it would impose new restrictions which Televisa has also vowed to fight.
The new rules applying to AMX are the latest piece of bad news for Mr Slim. His fortune has shed some $16bn since Donald Trump launched his presidential bid, according to Bloomberg, in part because of market turbulence in the peso currency.
The mogul, who recently held a wide-ranging news conference in which he ruled out running for the Mexican presidency and recommended people read Mr Trump’s books to understand how he operated, is the biggest loser on the Bloomberg Billionaires Index. Once the world’s richest man, Mr Slim now stands at number six, it said.