Mexico may cut millions of cellphones to fight crime

MEXICO CITY (Reuters) - Tens of millions of Mexicans could find their cellphones disconnected this weekend if the government goes ahead with a new law meant to fight crime by forcing people to register their identities.

Advertisements on government radio and television have been urging Mexicans for weeks to register their cellphones by sending their personal details as a text message, but on Thursday 30 million lines remained unregistered as the Saturday deadline neared.

Analysts said that any related losses for Mexico’s largest wireless operator, America Movil, would be tiny relative to the company’s overall sales.

Still, America Movil, controlled by billionaire Carlos Slim, is urging senators to extend the deadline for implementing the law, passed a year ago to try to stop criminals from using cellphones for extortion and to negotiate ransoms in kidnappings.

“Close to 30 million people will be affected ... many of whom depend on mobile phones as their only means of communication,” America Movil’s head of institutional relations, Guillermo Ferrer, said in emailed comments.

Most of Mexico’s 84 million mobile phones are prepaid handsets with a limited number of minutes of use that can be easily bought in stores. The phones can be topped up with more minutes through street corner vendors.

America Movil has 71 percent of Mexico’s wireless market, along with operations in Brazil, Chile and other countries in the region. Most of the rest of Mexico’s cellphone market is in the hands of Spain’s Telefonica.


Mexico is plagued by organized crime, from drug trafficking to express-kidnappings of taxi passengers to force them to make cash withdrawals from automatic teller machines. Increased media reports of kidnappings in 2008 led to calls for the cellphone registry.

Critics have said the law would be ineffective because criminals can easily register phones under other people’s identities.

But telecommunications watchdog head Hector Osuna said in a radio interview on Thursday authorities planned to check the legitimacy of data people submit.

This week, senators refused requests from telephone companies to extend the deadline for a year, but discussions were ongoing and a last-minute vote could not be ruled out.

The Reforma newspaper reported that a judge refused to give Telcel an injunction to stop the deadline.

Based on average spending habits, America Movil stands to lose around $10 million in revenue per day if the 30 million unregistered lines are cut.

“We think that disconnected users would look to register their line in the short term, though there could be an inevitable loss of revenues by the mobile companies,” BBVA analyst Andres Coello wrote in a note to clients.

Itau Securities analyst Martin Lara estimated that it would take a week, on average, to reactivate lines that were cut or to acquire new lines. That would cost America Movil 0.2 percent of projected sales for 2010.

If people who depend heavily on their wireless phones for work have already registered their lines, there could be less of an effect on America Movil’s revenue.

America Movil’s ADRs were down 1.26 percent, or 64 cents, at $50.34 in late trading on the New York Stock Exchange.

Reporting by Noel Randewich; Editing by Toni Reinhold