(Adds details, government statement, quotes)
By Christine Murray
MEXICO CITY, July 8 Billionaire Carlos Slim's
America Movil said on Tuesday it is ready to divest
assets in an unprecedented step to cut its market share in
Mexican telecoms below 50 percent and escape the burden of
The company, which controls some 70 percent of Mexico's
mobile market and 80 percent of the fixed line business, said in
a statement its board had decided to sell assets to another
company that could boost investment in the sector.
America Movil, Latin America's biggest telecoms company, did
not specify which assets it could get rid of, and a spokesman
said it was still open as to what and to whom it could sell.
But America Movil said the buyer needed to be "an option
that can genuinely take part in this capital-intensive sector,
to overcome the insufficient investment of our competitors."
The Mexican government hailed the decision, saying it was a
direct result of its drive to improve competition.
"The Transport and Communications Ministry declares that
this decision could transform competition in the
telecommunications sector with improved quality and better
prices for services to end users," the ministry said in a
Still, any divestitures would be "conditional" on America
Movil's mobile phone and fixed-line units no longer being
declared dominant players, the company said. That could still
create a potential conflict with Mexico's telecoms regulator.
Reducing Slim's market share below 50 percent would be a
triumph for President Enrique Pena Nieto, who took office 20
months ago pledging to boost competition in Latin America's no.
2 economy, where massive wealth is concentrated in few hands.
Slim is already under pressure to share his infrastructure
with competitors such as Spain's Telefonica, and the
sale could allow him to enter into lucrative markets he has so
far been kept out of, like pay TV.
"They're selling what they would have had to share anyway,"
said Jose Otero, president of Signals Telecom Consulting.
America Movil also said in its statement it would renounce
its option to buy a majority stake in satellite television
company Dish Mexico, with whom it has a billing arrangement that
competitors say violates its exclusion from TV.
Still, the company, which had revenues of 786 billion
Mexican pesos ($60.54 billion) last year, added it expected to
be allowed to offer all telecommunications services, which
include pay TV, in return for going ahead with divestitures.
To escape the antitrust measures applied to dominant players
by new watchdog Federal Institute of Telecommunications (IFT),
America Movil must present its plan to the regulator.
According to new regulations under debate in Congress that
will govern a sweeping telecoms and broadcasting reform passed
last year, the IFT would only free America Movil from tougher
regulation once "effective competition conditions" exist.
Reducing America Movil's number of users below 50 percent
would be complex and could even have negative repercussions on
consumers in the short term, said Enrique Melrose, a former
commissioner of Mexico's previous telecoms watchdog, Cofetel.
America Movil announced its plan just as the lower house of
Congress was giving general approval to those so-called
secondary laws for Pena Nieto's telecoms reform, which gives the
IFT the power to break up dominant players if necessary.
The reform, which also targets Mexico's dominant broadcaster
Televisa, has loomed over Slim's businesses since
Pena Nieto first presented it on March 11. Still, shares in
America Movil are up 2.4 percent since then.
Under it, Slim's companies are being forced to slash costs
they charge other companies to complete calls on their network
along with a series of other restrictive measures.
The measures are the toughest battery of regulations Slim
has faced since he took control of Mexico's former state phone
monopoly at the start of the 1990s. The company, known as
Telmex, helped to make him the world's richest man by 2010.
America Movil, which had 105 million mobile subscribers in
the first quarter of this year, also said it was prepared to
separate its cellphone towers and other infrastructure. However,
it did not detail how it could do so.
($1 = 12.9840 Mexican Pesos)
(Additional reporting by Dave Graham, Michael O'Boyle and Tomas
Sarmiento; Editing by Mohammad Zargham)