UPDATE 1-Mexico lower house returns telecom bill to Senate for minor change

Thu Apr 25, 2013 8:21pm EDT

By Miguel Gutierrez and Dave Graham

MEXICO CITY, April 25 (Reuters) - Mexico's lower house of Congress gave general approval to a telecoms reform bill on Thursday that aims to boost competition in the phone and television markets and tame dominant players like tycoon Carlos Slim and broadcaster Televisa.

However, the bill, one of the main planks of a reform drive that President Enrique Pena Nieto hopes will boost economic growth in Latin America's no. 2 economy, must return to the Senate after lawmakers called for a small change in language.

The shake-up of the industry encourages more foreign investment in the telecoms sector and gives regulators the power to stop companies from controlling more than 50 percent of the market, a measure aimed directly at Slim and Televisa.

Slim's phone company America Movil controls some 80 percent of the fixed line business and about 70 percent of the mobile market. Televisa has more than 60 percent of the television market.

If companies are declared dominant by the competition regulator, forced asset sales will not be automatic, though.

The legislation mandates the creation of a new regulator, known as Ifetel, which will oversee the telecoms market. The reform also outlines the shape of a new federal competition commission, which will regulate all other areas.

Last week, the Senate amended the bill to stipulate that companies that are fined or told to sell off assets by the new federal competition commission would have the right to lodge appeals to suspend decisions by the regulator. Companies have used the tactic in the past to fight competition rulings.

Lawmakers on Thursday amended that very section of the bill, replacing two words with one to make clear that those appeals could only be lodged against fines and orders to divest assets.

However, Televisa and America Movil will be subject to Ifetel, not the federal competition commission, hampering their ability to contest regulatory rulings.

The Senate is expected to approve Thursday's change early next week, before the current session of Congress is over. If the amended article is changed again by the Senate, the remainder of the legislation can be passed without it.

Once he has signed off the telecoms bill, Pena Nieto faces a challenge to push through major fiscal and energy reforms.

Uncertainty over the final details of the bill has been dragging on the share prices of America Movil and Televisa.

America Movil Chief Executive Daniel Hajj said on Friday the new law was likely to mean the company would be determined a dominant player as it published its results.

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.