Mexico watchdog weighs if America Movil, Televisa dominate sector

MEXICO CITY Thu Dec 5, 2013 5:08pm EST

Mexican billionaire Carlos Slim walks on stage for an event of the Fundacion Telmex Mexico Siglo XXI (Telmex Foundation Mexico XXI Century) in Mexico City September 12, 2013. REUTERS/Bernardo Montoya

Mexican billionaire Carlos Slim walks on stage for an event of the Fundacion Telmex Mexico Siglo XXI (Telmex Foundation Mexico XXI Century) in Mexico City September 12, 2013.

Credit: Reuters/Bernardo Montoya

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MEXICO CITY (Reuters) - Giant Mexican telco America Movil and broadcaster Televisa, the two companies likely to be most affected by the country's telecoms reform, said on Thursday the regulator has told them it was determining whether they are dominant players in the sector.

The notifications are the first step in a process mandated by a telecoms reform passed by Mexico's Congress earlier this year that gives the new Federal Telecommunications Institute (IFT) powers to clamp down on dominant players and spur competition.

Televisa, the world's largest producer of Spanish-language content, said in a regulatory filing it was analyzing the news and preparing an official response.

America Movil, the telecoms behemoth controlled by Mexican billionaire Carlos Slim, later said that it and its subsidiaries, including fixed-line operator Telmex, have also been placed under review by the watchdog and asked to hand over information about the size of the market.

America Movil said it had received a notice "related to the beginning of a process toward the probable determination of being a dominant economic agent in Mexico's telecommunications market.

The company had already said it expects to be declared dominant.

America Movil shares ended down 1.69 percent at 14.55 pesos ($1.12) before the company disclosed the review. Televisa's shares closed down 2.1 percent, having fallen more than 3 percent earlier on the news.

On Wednesday, the IFT said it had informed unidentified companies it will assess for tougher regulation.

Under the new rules, the IFT has powers to break up telecoms companies that are found to be impeding competition, although those powers are only intended to be used as a last resort.

The IFT, which has until March to determine which firms are "predominant," can also apply other measures to drive competition, including forced sharing of infrastructure and creating a price regime to aid smaller rivals.

America Movil and Televisa have spent years battling efforts to impose tougher rules on how they operate, using legal injunctions and appeals to thwart regulators. Much of that legal cover has been stripped away by the reform.

The reform allows companies to argue why they believe they are not dominant, and both Televisa and America Movil are expected to fight their ground.

Secondary legislation to implement the telecoms reform has been delayed, giving the likely targets more time to prepare their defenses. Congress is expected to begin looking at the secondary legislation in February.

($1 = 13.0242 Mexican pesos)

(Reporting by Veronica Gomez; Writing by Gabriel Stargardter; Editing by Simon Gardner and Leslie Adler)

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