MEXICO CITY Jan 16 The fixed-line business of Mexican billionaire Carlos Slim on Thursday rejected suggestions that it was divesting assets to avoid tougher regulation after a judge ordered the company, Telmex, to cease its disposals.
Some analysts and rivals said Telmex was spinning off a unit holding assets such as fiber optic and telephone poles to get them off the books of Telmex parent, America Movil.
But Telmex, which has used the law to fight efforts to impose tougher regulation in the past, denied it was trying to duck stricter rules and said the spun-off company will hold only real estate and leasing businesses.
"Telmex is not undertaking any action to avoid regulation which it has already welcomed and which should benefit the whole telecommunications sector and consequently the consumer," a spokeswoman for Telmex said.
America Movil has around 70 percent of the mobile market and 80 percent of the fixed-line business in Mexico. Weakening the company's hold on the market was one of the principal aims of a sweeping telecom reform the government passed in June.
The law includes provisions that could make America Movil share its network at cost or even sell assets.
Under a court order issued on Jan. 7, first reported by local newspaper El Financiero and seen by Reuters, Telmex must now halt plans announced in July to divest certain assets. A court spokeswoman declined to comment on the order.
The Telmex spokeswoman said she did not have enough information to comment on the court order.
Shareholders in Telmex agreed to spin off a new company made up of three units called Alquiladora de Casas, Compania de Telefonos y Bienes Raices and Renta de Equipo, that it says are real estate and leasing businesses.
But Bestphone, owned by broadcaster Grupo Televisa , believes the assets are vital to Slim's network and the spin-off should have been reported to regulators.
"Bestphone is very concerned that the spin-offs are a ploy to avoid the telecom reform, in particular an effort to avoid important aspects such as interconnection (between phone companies), which would reduce costs to consumers' benefit," a Bestphone spokesman said.
A spokesman for Telmex, which in July informed Mexico's stock exchange that the divestitures featured the three companies, whose businesses include real estate and equipment rental, said the company had confirmed this disclosure.
Government documents in Mexico published online show environmental and other permit requests for the spun-off companies to build or operate network equipment.
One of the documents shows Alquiladora de Casas requesting a permit to build and operate antenna systems.
Another one shows Compania de Telefonos y Bienes Raices registering a project for expanding telephone lines.
A spokeswoman for Mexico's Federal Telecommunications Institute (IFT), the country's telecoms watchdog, did not immediately respond to a request for comment.
When asked about the spin-off in July, America Movil Chief Executive Daniel Hajj told a conference call: "These are businesses focused more on real estate and leasing...this proposal is not connected with the telecom business of Telmex."
Gerardo Soria, president of legal consultancy the Institute of Telecommunications Law, said he believes that the transaction is an effort to lighten the regulatory burden on Telmex.
The assets could be transferred to a real estate investment trust which could then rent out a network in its entirety or in part to third-parties including Telmex, Soria said.
The Telmex spokeswoman said the new, hived-off company did not contain assets intended for providing telecom services.
Televisa is owned by Slim rival Emilio Azcarraga. The billionaires have frequently fought in courts in recent years.