Mexico's America Movil fined by regulator; calls it 'illegal and disproportionate'

MEXICO CITY (Reuters) - America Movil, the telecoms giant controlled by the family of Mexican billionaire Carlos Slim, said on Monday that one of its subsidiaries had been fined 1.3 billion pesos ($69.53 million) by Mexico’s telecoms regulator.

FILE PHOTO: Mexican billionaire Carlos Slim addresses the audience during an event in Mexico City, Mexico November 27, 2019. REUTERS/Luis Cortes

The company decried the fine.

The regulator, the Federal Telecommunications Institute (IFT), said in a statement that it fined the company for failing to share information about the availability of its telecom infrastructure, such as posts, with competitors.

America Movil said the regulator’s action reflected a “lack of due process,” and it vowed to exercise “all legal remedies to challenge it.”

“This arbitrary, illegal and disproportionate fine affects the legal certainty in a sector that requires important investments,” the company said in a statement.

America Movil, which has long dominated Mexico’s telecoms market, is required to open its infrastructure to industry rivals in order to promote competition. But competitors grumble that they do not have sufficient access.

The fine was levied against one of America Movil’s subsidiaries, Telefonos del Noroeste, known as Telnor, after the IFT found the unit had failed to share the necessary information as of September 2017. The penalty represents 6% of Telnor’s revenues.

Sharing information about infrastructure puts competitors on more even footing and “promotes the development of competition in the telecommunications sector,” the IFT said in a statement.

Sharing infrastructure among telecom companies can be a crucial way to extend coverage and bring down costs to consumers, said Roger Entner, an analyst at Recon Analytics. Despite America Movil’s protests, a $69 million fine is unlikely to change the company’s conduct, he said, due to its deep pockets.

“Penalties of that amount, it’s like the cost of doing business,” he said.

If the fine withstands legal challenges, it is not expected to affect America Movil’s consolidated financial results, analysts from Mexican bank Banorte wrote in a note to investors. Nevertheless, they warned America Movil’s share price could be hit.

($1 = 18.6980 Mexican pesos)

Reporting by Julia Love; additional reporting by Lizbeth Diaz; editing by Stefanie Eschenbacher and Leslie Adler