Mexico watchdog probes Carlos Slim stronghold again

Mexican tycoon Carlos Slim arrives to attend the opening of the Soumaya museum in Mexico City March 1, 2011.

MEXICO CITY (Reuters) - The world's richest man, Carlos Slim, appears to face another probe from Mexico's competition watchdog although a separate court ruling is fanning the tycoon's hopes of finally breaking into the television market.

The Federal Competition Commission said on Friday it is investigating "relative monopolistic practices" in telephone interconnection services, without giving further details.

Interconnection fees, charged between phone companies to transport, start or finish calls on their respective networks, are at the heart of a bitter battle between Slim and Mexico's top broadcasters and cable companies, which have stepped into the mogul's stronghold by offering phone services using broadband.

The watchdog's fourth action this year in the communications market is part of a bid by regulators to curb the power of business leaders including Slim, who topped the Forbes rich list for the second year in a row in 2011 as his personal fortune soared to $74 billion.

Concerns about the impact of this tougher stance have knocked shares in Slim's flagship America Movil to their lowest level in nearly a year, although Slim is drawing hope from court rulings in his four-year battle to add pay TV to his Internet, cell phone and fixed-line offerings.

A local court ordered the government to respond this week to its request to be allowed to offer pay television services in Mexico, Telmex said late on Thursday.

The court's order puts further pressure on the country's Communications and Transport Ministry, which must approve any change to Telmex's concession -- granted more than two decades ago -- in order to offer pay TV.

"The ongoing feud in Mexican telecoms makes the government's resistance appear untenable and this is now turning into clear moves in Telmex's favor," UBS analyst Tomas Lajous said in a report on Friday. "All in, pay-TV should come as soon as this year."

The lure of pay TV could help Telmex hold on to customers who have been steadily canceling fixed-line contracts in favor of cheaper cell phones, including those from parent America Movil. Internet is its one business that has kept growing strongly.

WHICH ROAD?

If Telmex gets the green light from authorities, it has two paths ahead: buy a majority stake in partner DISH Mexico, which offers direct-to-home satellite services, or offer video services using its own broadband.

"These actions would probably mean a new growth driver for Telmex and will improve its positioning to better hold clients," Santander said in a report.

Telmex is the main provider of fixed phone services in Mexico, with just under 13 million lines, and also has a majority share of the Internet market with 7.6 million broadband lines.

America Movil has 70 percent of the cell phone market, with 66 million Mexican clients.

Watchdog Cofeco slapped the company with an unprecedented $1 billion fine for abusing its power, amid an increasingly bitter feud with the country's top broadcasters Televisa and TV Azteca over access fees.

"To have competition in telecoms, interconnection fees have to come down, no doubt about it. But also, there have to be better content distribution networks," Eduardo Perez Motta, head of Cofeco, told Reuters in an interview on Friday.

Cofeco last month launched two separate investigations into alleged monopolistic practices in the sale of television advertising and telecommunications interconnection services.

One of these was likely targeted at Televisa and TV Azteca, who stopped advertising Slim companies in a move many analysts read as a way to pressure the tycoon to lower interconnection fees.

Telmex shares, which had gained more than 5 percent in the past two sessions, slipped 0.09 percent to 10.94 pesos in afternoon trading in the local bourse Friday afternoon. Its New York-traded stock closed 1.3 percent lower at $18.57.

(Additional reporting by Elinor Comlay; Editing by Gerald E. McCormick, Steve Orlofsky and Matthew Lewis)