Carlos Slim bows to Mexico telecoms reform

Billionaire Carlos Slim's America Movil AMXL.MX said on Tuesday it is ready to divest assets in an unprecedented step to cut its market share in Mexican telecoms below 50 per cent and escape the burden of tougher regulations. The company, which controls some 70 per cent of Mexico's mobile market and 80 per cent of the fixed line business, said in a statement its board had decided to sell assets to another company that could boost investment in the sector. America Movil, Latin America's biggest telecoms company, did not specify which assets it could get rid of, and a spokesman said it was still open as to what and to whom it could sell. But America Movil said the buyer needed to be ‘an option that can genuinely take part in this capital-intensive sector, to overcome the insufficient investment of our competitors.’ The Mexican government hailed the decision, saying it was a direct result of its drive to improve competition. ‘The Transport and Communications Ministry declares that this decision could transform competition in the telecommunications sector with improved quality and better prices for services to end users,’ the ministry said in a statement. Still, any divestitures would be ‘conditional’ on America Movil's mobile phone and fixed-line units no longer being declared dominant players, the company said. That could still create a potential conflict with Mexico's telecoms regulator. Reducing Slim's market share below 50 per cent would be a triumph for President Enrique Pena Nieto, who took office 20 months ago pledging to boost competition in Latin America's no. 2 economy, where massive wealth is concentrated in few hands. Slim is already under pressure to share his infrastructure with competitors such as Spain's Telefonica TEF.MC, and the sale could allow him to enter into lucrative markets he has so far been kept out of. ‘They're selling what they would have had to share anyway,’ said Jose Otero, president of Signals Telecom Consulting. America Movil also said in its statement it would renounce its option to buy a majority stake in satellite television company Dish Mexico, with whom it has a billing arrangement that competitors say violates its exclusion from TV. Still, the company, which had revenues of 786 billion Mexican pesos ($60.54 billion) last year, added it expected to be allowed to offer all telecommunications services, which include pay TV, in return for going ahead with divestitures, according to Reuters.