* Mexico lawmakers set to approve telecom tax
* Carlos Slim's Telmex seen at risk
* Critics warn levy will slow telecom development
(Adds detail, quote, stock prices, byline)
By Noel Randewich and Tomas Sarmiento
MEXICO CITY, Oct 20 Mexican legislators looking
to shore up depleted public finances were expected to approve
on Tuesday a tax on telecommunications services, a blow to
billionaire Carlos Slim, who dominates the industry.
The lower house's finance panel has signed off on the
creation of a 3 percent excise tax on telephone and Internet
services, markets where Slim's fixed-line operator Telmex
TELMEXL.MX TMX.N leads.
If it is approved by the lower house and then the Senate,
the tax could translate into higher prices -- possibly leading
to lower sales -- as telephone companies pass the levy on to
Critics warn the tax would retard the growth of telephone
and Internet use among low-income Mexicans but defenders say it
will only have a small effect.
"The companies that are most affected will be those that
depend most on Mexico for their sales, like Telmex, Axtel
(AXTELCPO.MX) and Maxcom MXCMCPO.MX," said Martin Lara, an
analyst at Vector brokerage.
Slim's America Movil (AMXL.MX) (AMX.N), Latin America's
leading cellphone operator, would likely suffer less overall
because only part of its operations are in Mexico.
Lara estimated the tax could cause a 3 percent decline in
Telmex's sales and a 6 percent reduction in earnings before
interest, tax, depreciation and amortization, or EBITDA.
Revenues at America Movil, which also operates in Brazil,
Chile, Argentina and other countries in the region, might slip
1 percent, with a 3 percent fall in EBITDA, Lara said.
America Movil and Telmex, a former state monopoly, dominate
Mexico's telecommunications industry but have come under
pressure in recent years by growing competition from small
players and from increased regulation as the government tries
to pry open up the market.
The Organization for Economic Co-operation and Development
says Internet service in Mexico is already expensive and
extremely slow compared to other member countries.
Around a quarter of Mexicans use the Internet, many of them
only at work or at Internet cafes, according to Mexico's
"I don't think the tax will have a big effect on (market)
penetration," John Scott, a researcher at Mexico's CIDE think
tank. "The tax's effect will be very small."
The telecommunications tax is part of a fiscal package
proposed by President Felipe Calderon in a bid to help Mexico's
government reduce its dependence on oil volatile exports.
America Movil and Telmex declined to comment.
Legislators may also increase the value added tax rate by 1
percentage point to 16 percent, which would also affect
Telecommunications shares were mixed on Tuesday. Telmex
rose 1.06 percent, while America Movil slipped 0.42 percent.
Broadcaster Televisa (TLVACPO.MX) (TV.N), which offers
telephone and Internet services through several cable companies
across the country, rose 1.92 percent on Tuesday.
Legislators are also expected to increase a sales tax on
beer by 1.5 percentage points to 26.5 percent, a proposal that
has been opposed by Grupo Modelo GMODELOC.MX and Femsa
(FMSAUBD.MX), Mexico's two main brewers.
(Reporting by Noel Randewich and Tomas Sarmiento)