* Reform aims to reduce America Movil‘s, Televisa’s dominance
* America Movil and Televisa shares fall
* Bill also puts forward new telecom regulator
By Michael O‘Boyle and Dave Graham
MEXICO CITY, March 11 (Reuters) - Mexico’s government on Monday threatened the country’s telecommunications giants with forced asset sales, unveiling a plan to loosen billionaire Carlos Slim’s hold on the telephone market and curb broadcaster Televisa’s dominance of the airwaves.
The long-awaited plan seeks to shake up the telecoms sector by allowing increased foreign ownership of media and phone companies, and giving regulators the power to force asset sales by players controlling more than 50 percent of the market.
“We must encourage competition,” said President Enrique Pena Nieto at an event presenting the plan. “As a result of this reform, companies will be able to grow, but they will have to do so through innovation and investment, by improving their tariffs and raising the quality of their service.”
Pena Nieto’s government, which took office in December, negotiated the reform bill with leaders from the main opposition parties after the two forged an accord with the president in December called the Pact for Mexico.
However, the planned reform may still face a tough road in Congress, where Pena Nieto lacks a majority.
Slim, the world’s richest man, dominates Mexico’s telecommunications market, controlling 70 percent of the country’s mobile market and 80 percent of its fixed phone lines.
Televisa, controlled by tycoon Emilio Azcarraga, has about 60 percent of the broadcast market.
The reform stipulates that any company with a market share exceeding 50 percent will be deemed dominant.
A dominant player may be subject to sanctions including possible forced asset disposals, the bill said. It also seeks to curb the ability of companies to suspend legal rulings against them while they appeal decisions.
The reform also will increase competition in the television market, by auctioning rights to run two new television channels, a process that will not be open to the two most powerful broadcasters, Televisa and TV Azteca.
The bill proposed introducing a new telecoms regulator, the Federal Institute of Telecommunications (IFT), along with specialized courts for settling competition disputes.
Mexico’s peso strengthened to its highest point in 18 months early on Monday with traders saying the currency had benefited from optimism on the country’s reform drive.
The benchmark IPC stock index slipped 0.7 percent, dragged by a tumble of more than 3 percent for America Movil and nearly a 1 percent fall for Televisa.
A spokesman for Slim declined to comment on the reform before it was presented. Televisa said in a statement that it welcomed the proposal.
Some worry that Congress could water down the plan, but lawmakers in Pena Nieto’s Institutional Revolutionary Party (PRI) are confident the bill will succeed.
PRI congressman Hector Garcia said he expected it to pass the lower house of Congress by the end of next week and get Senate approval by when the current session ends on April 30.
“We’re certain it’ll be voted on in the Senate this period,” he said. “The Pact for Mexico stipulates this timeframe.”
While the outline of the bill presented on Monday prompted investors to dump shares in the large incumbents, America Movil and Televisa, smaller companies benefited from the announcement.
Shares of Mexican phone companies Maxcom and Axtel, which has waded deep into debt to compete with Slim’s fixed line giant Telmex, gained about 7 percent apiece. Shares in cable firm Megacable rose 2 percent while TV Azteca shares were nearly flat.
“It’s obvious the reform will benefit the companies with the least market share,” said Jorge Nevid, head of trading at brokerage Accival in Mexico City.
Purely in terms of revenue, America Movil could be much harder hit by the reform than Televisa.
Slim’s companies had 67 percent of the 414 billion pesos ($32.99 billion) in total revenue from Mexican phone and television companies in 2012, while Televisa’s cable companies had just 8.5 percent, according to data from market research group The Competitive Intelligence Unit.