Photo: America Movil
Billionaire Carlos Slim’s America Movil says it is prepared to divest assets to bring its share of Mexico’s telecommunications market below 50 percent, a necessary step to shed its dominant-player tag and an accompanying heavy regulatory burden.
The Mexico City-based company said in a regulatory filing that the divestitures would be conditional on wireless unit Telcel and fixed-line subsidiary Telmex “ceasing to be preponderant economic agents and subject to asymmetric regulations, and being able to access the provision of convergent services.”
That was in reference to America Movil’s long-sought goal of entering Mexico’s pay-television market. The company has been denied the right to offer a “triple play” of television, Internet and telephone service in its home country due to competition concerns.
America Movil is a major pay-TV player elsewhere in the Americas.
Slim’s company added that the “assets must be sold at market conditions at their commercial value” to a new independent operator with a high degree of economic and technical capacity.
That new operator must represent a “real option to participate in this capital-intensive sector, to overcome the obstacle of the insufficient investment made by our Mexican competitors,” America Movil said.
It added that all “cellular sites (base stations), including towers and related passive infrastructure, will be separated from Telcel for their corresponding operation and commercialization to all interested parties.”
The company said the implementation of the approved measures will be subject to corporate, regulatory and governmental authorizations and the approval of the board of directors or shareholders’ meetings of America Movil and/or its subsidiaries.
The filing added that Telmex “ratifies and strengthens the commercial agreement with Dish Mexico,” which consists of billing and collection services, distribution and equipment leasing, but is waiving its right to acquire 51 percent of that company’s capital stock.
Hours after the statement was released, Mexico’s Communications and Transportation Secretariat said America Movil’s “decision may transform the conditions of effective competition in the telecommunications sector, with greater quality and better prices for services to end users.”
In March, Mexico’s IFT regulator, created as part of a telecommunications and broadcast television overhaul approved last year, said America Movil was part of an interest group that constituted a “preponderant economic agent” in Mexico’s telecommunications market.
The IFT also imposed additional regulations to accompany that dominant-player tag, including “asymmetric (interconnection) rates” and the sharing of infrastructure at rates to be negotiated among the operators.
Mexico’s lower house approved on Wednesday the implementing laws for the 2013 overhaul, which was aimed at promoting competition in the telephone and television sectors and reducing the dominance of America Movil’s units and broadcast TV titan Televisa.
The enabling legislation, among other things, prohibits companies that provide fixed-line or mobile telephony from charging users domestic long-distance fees beginning in 2015.
The legislation now goes to President Enrique Peña Nieto for his signature.
Telcel controls a roughly 70 percent share of Mexico’s cellular market, while Telmex’s share of the fixed-line business stands at about 80 percent.