| MEXICO CITY, July 9
MEXICO CITY, July 9 Mexican tycoon Carlos Slim's
plan to divest a chunk of his most valuable asset, phone company
America Movil, could open Mexico's telecoms market as never
before to rivals.
After a generation of enjoying a near-monopoly that allowed
Slim to become the world's richest man, he plans to sell parts
of America Movil to a competitor to avoid new penalty
measures to curb the company's dominance.
Companies like AT&T, Telefonica, Virgin
Mobile and Grupo Televisa which have varying
degrees of interest in Mexico, could benefit from buying parts
of America Movil, which has some 70 percent of Mexico's mobile
market and is the strongest force in fixed line and Internet.
To avoid penalties, the company must arrive at a share below
50 percent of the overall Mexican telecoms market, as calculated
by regulator Federal Telecommunications Institute (IFT) using
subscriber numbers and network capacity.
"The trick will be in how they present the plan," Miguel
Flores, a former Mexican competition regulator, told Reuters.
"They could frame this in a way that they don't lose much share
of the market by revenue."
To reach less than half of Mexico's mobile subscribers,
America Movil would have to cut ties with around 20 million
customers in Mexico, according to a Reuters calculation.
So-called mobile virtual network operators (MVNO) like
Virgin, which piggyback on existing telecoms infrastructure to
provide services, could be interested in these mobile clients.
Arturo Elias, a spokesman for Slim, told Mexican radio on
Wednesday that he thought the company would have to sell around
15-17 percent of the overall phone market to get below 50
percent. America Movil aims to sell to a single buyer, he said.
Newcomers to Mexico may not find the assets attractive,
given America Movil will still control close to half the
Major wireless companies like Vodafone and Verizon turned
their back on the country a decade ago after failing to break
the hold the 74-year-old billionaire has on the industry.
One company with the heft to compete with Slim that has been
expanding in Latin America is his former partner AT&T.
Slim purchased Mexican state telephone company Telmex in
1990 with the forerunner of what is now AT&T, a deal that helped
make him the world's richest man by 2010.
Slim repaid the favor last month when he bought AT&T's 8
percent stake in America Movil for around $5.6 billion when the
U.S. firm sold to get regulatory approval for its decision to
buy U.S. satellite provider DirecTV.
That deal makes AT&T a partner of Slim's rival, broadcaster
Televisa through joint ownership of satellite firm Sky Mexico.
On a conference call this week Televisa said that it was looking
forward to exploring joint opportunities with AT&T in Mexico.
AT&T's CEO acknowledged he was now competing with Slim just
after the company announced the DirectTV deal.
AT&T declined to comment on a possible purchase of assets.
To lure a company not currently in Mexico, what Slim sells
would have to amount to a real platform to launch nationally,
one telecoms banker told Reuters on condition of anonymity. "I
think that's unlikely," the banker said. "You'd need things like
spectrum, customers, some sort of national roaming accord."
Industry experts believe America Movil's move could open the
door to MVNO operators buying up blocks of subscribers from
Slim, possibly in auctions. Among them are Richard Branson's
Virgin, which launched in Mexico this year.
Spain's Telefonica, number two in Mexico's mobile market,
may also seek to extend its roughly 20 percent market share, and
recently made a deal to let Virgin use its network.
Telefonica also has an infrastructure-sharing deal with
Iusacell, Mexico's no. 3 telecoms operator by subscribers, which
is owned by Televisa and TV Azteca, the no. 2
Slim may put infrastructure up for grabs, which could let
companies forge alliances in Mexico to compete. Infrastructure
would generate lots of interest from companies such as America
Tower, Jose Otero, President of Signals Telecom said.
Macquarie analyst Kevin Smithen estimated that in 85,000 of
185,000 villages in Mexico, rural customers linked by copper
cables and pre-paid mobile subscriptions are served only by
America Movil, generating very low free cash flow.
They make up the 20 to 30 percent reduction in market share
needed to get the company below 50, Smithen said in a note.
The sale does not just help competitors, however.
Hiving off assets could allow Slim to expand his operations
in Brazil and Europe, as well as gain approval to enter into pay
television at home, a market with low penetration in Mexico,
where he would compete with Televisa.
(Additional reporting by Tomas Sarmiento, Alexandra Alper,
Michael O'Boyle and Dave Graham in Mexico City, Leila Abboud in
Paris and Kate Holton in London; Editing by Dave Graham and