UPDATE 1-Tycoon Slim defends Telcel from dominance charge

(Adds background, analyst's quote)

By Noel Randewich and Tomas Sarmiento

MEXICO CITY, Nov 20 (Reuters) - Carlos Slim, one of the world's richest men, defended his mobile telephone behemoth America Movil on Thursday against charges it stifles competition in Mexico and bullies consumers.

Mexico's competition watchdog ruled recently that America Movil's (AMXL.MX)(AMX.N) Telcel network wields "substantial power" due to its massive market share and could be subject to more regulation to prevent abuse of consumers.

Telcel charges substantially higher prices than other carriers in Mexico's fast-growing mobile telephone industry, according to the Federal Competition Commission.

In some rural areas in Mexico it is the only operator with coverage and has far more stores than its competitors.

But Slim said the Mexican market was full of competitors.

"You guys watch television and you see the brutal competition between companies. Look at Nextel, Telefonica, Telcel, Iusacell all advertising," Slim told reporters.

"They're growing faster than Telcel, so I don't understand that decision," he said.

America Movil's market share in Mexico's mobile telephone industry is 70 percent, down from 75 percent in 2004.

America Movil, with operations in 17 countries, is Latin America's largest cellphone operator.

America Movil and Slim's fixed-line operator, Telmex (TELMEXL.MX) (TMX.N), are often accused by politicians and consumers of unfairly dominating Mexico's telecommunications market.

Spain's Telefonica (TEF.MC) is America Movil's top competitor in Mexico, followed by smaller rivals Nextel and Iusacell.

Mexico's telecommunications industry, including fixed-lines and cellphones, grew at a 35 percent annual rate in the second quarter, according to the government.

The commission's ruling, which can be appealed, means America Movil eventually might face additional regulation to bolster competition.

"If they lose and are declared dominant, we would see more regulation in terms of sales practices and prices," said Manuel Jimenez, an analyst at Ixe brokerage in Mexico City.

Slim's Telmex in the past has overcome similar complaints that it stifles competition in Mexico's fixed-line market. (Reporting by Noel Randewich and Tomas Sarmiento; Editing by Toni Reinhold)