April 5, 2013 / 1:15 AM / in 5 years

UPDATE 1-Mexican watchdog's ruling another blow to Slim's Telcel

MEXICO CITY, April 4 (Reuters) - Mexico’s competition watchdog Cofeco said mobile phone company Telcel dominates the country’s phone market, opening the door to tougher regulation of the company owned by Carlos Slim, the world’s richest man.

The announcement on Thursday confirms a 2010 ruling by Cofeco, against which that Slim’s company had appealed.

The decision could pave the way for Mexico’s regulators to force Telcel to reduce the fees it charges smaller rivals for connecting to its vast network.

Telcel, the Mexican unit of phone giant America Movil , is the country’s biggest mobile operator with about a 70 percent market share. Spain’s Telefonica is a distant second with about 20 percent of the market.

A spokeswoman for America Movil said the company is reviewing the announcement and considering its legal options.

Separately, Cofeco said on Wednesday it would temporarily suspend a $53 million fine levied against Slim’s fixed-line phone company Telmex in February after the company requested a review of the fine.

Mexico’s competition watchdog has been trying to increase oversight of Slim’s companies, but with little success to date.

Mexicans were overcharged $13.4 billion a year from 2005 to 2009 for phone and Internet services as a result of the lack of competition in Mexico’s phone market, according to a January 2012 report by the Organisation for Economic Co-operation and Development funded by the Mexican government.

America Movil has said the OECD report is flawed and does not “provide a correct vision of the state of the Mexican market.”

Mexico’s president Enrique Pena Nieto, who took office in December, has said he wants to increase competition in the sector and last month presented a plan for sweeping reform of the telecommunications industry.

The telecom reform was backed by Mexico’s lower house and is now before the Senate.

America Movil shares are down more than 16 percent since the start of the year, partly due to concerns Pena Nieto’s government could step up regulation.

About 35 percent of America Movil’s revenue of 775 billion pesos ($60 billion) in 2012 came from Mexico.

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