Mexico telecom prices fall after reform aimed at curbing Slim

MEXICO CITY, March 8 (Reuters) - Cell phone service prices in Mexico have fallen almost 17 percent in two years, the country’s telecoms regulator said on Sunday, after a reform aimed at curbing the power of billionaire Carlos Slim in the sector slashed call costs.

In the past year, Slim’s America Movil, which controls 70 percent of Mexico’s mobile market, was banned from charging national roaming fees and a new law said it could not charge competitors for interconnection to its network.

The measures are part of a sector overhaul spearheaded by President Enrique Pena Nieto, who said in January that it was already bringing benefits to Mexicans.

Cell phone service prices fell 16.7 percent between February 2013 and January 2015, regulator the Federal Telecommunications Institute (IFT) said.

However, the test of the reform will be whether it generates genuine competition in the sector and improves service quality as well as prices. Private sector investment in communications fell 30 percent in 2013, according to government figures. It has not released 2014 numbers.

Earlier this year U.S. carrier AT&T completed its purchase of Mexico’s No.3 mobile player Iusacell and said it would buy the No.4 Nextel. It has yet to announce detailed Mexico investment plans.

The new rules are hurting America Movil, Latin America’s largest telecoms company, which is controlled by the Slim family. In the fourth quarter its Mexico wireless voice revenues plummeted 15 percent.

The company is challenging the rules in the courts.

In the telecoms sector overall, prices fell 15.3 percent in the period, compared to a 7.2 percent rise in the general consumer price index, the IFT said.

In fixed-line, the elimination of long distance charges prompted providers to offer better packages to consumers, including better rates on international calls, the IFT said.

The only telecoms service that showed a price increase in the period was Pay TV, where the largest player Grupo Televisa has used a provision in the new law which allows it to buy cable companies without regulatory approval.

The IFT is currently studying the Pay TV market to see whether any players have “substantial market power.” It could result in stiffer regulations for Televisa. (Reporting by Christine Murray; Editing by Chris Reese)