August 31, 2017 / 3:05 PM / a year ago

OECD recommends Slim's entry to Mexico TV to spur competition

MEXICO CITY (Reuters) - As Carlos Slim’s America Movil (AMXL.MX) begins to loosen its grip on Mexico’s telecom sector, the company could be the key to more competition in television, another highly saturated Mexican industry, a report released on Thursday said.

The logo of America Movil is pictured on the wall of a reception area in the company's corporate offices in Mexico City, Mexico, May 18, 2017. REUTERS/Edgard Garrido

The Organization for Economic Co-operation and Development hailed the results of Mexico’s 2014 telecom reform, which sought to shake up a sector long dominated by Slim and was in part based on a 2012 study by the Paris-based group.

That study created headaches for Mexico’s richest man, as it found consumers were overpaying billions of dollars each year for phone and internet services in a market he dominates.

With the new report, however, the OECD advocates giving Slim something he has long sought: permission to enter the television market.

It argues Mexico telecom regulator IFT should consider allowing the telecom giant to offer pay TV once it separates part of its network infrastructure into a new entity, as ordered by the IFT in March.

“The IFT should assess the entry of (America Movil unit) Telmex into pay TV as soon as possible, following the successful implementation of its functional separation,” the group wrote. It argued that such a change would allow the company to “compete with rivals by offering a full bundle of services including pay TV.”

In the new report, the group found 28 of its 31 recommendations on the telecoms market have been fully implemented, driving down costs for consumers and attracting more foreign investment.

Assessing the telecom reform’s progress, the OECD found that the number of mobile broadband subscriptions had increased by 50 million from 2012 to 2016.

Prices for such packages have fallen by as much as 75 percent, transforming Mexico from one of the most expensive markets for mobile internet to one of the cheapest, the OECD said.

But broadcasting had seen less progress, the group said. Mexican broadcasting has long been dominated by Grupo Televisa and TV Azteca.

Yet the OECD said it was too soon to evaluate the success of broadcasting measures, a point Televisa seized on. Like America Movil, Televisa has been deemed a preponderant player in its market, and was forced to offer its channels to other pay-TV players, among other measures.

“Televisa is in full compliance with all of its measures of preponderance,” the company said in a statement. “Thus, as the report also points out, one must analyze the competitive environment in the broadcasting sector as time goes on.”

Spokesmen for America Movil and TV Azteca did not respond to requests for comment.

The telecom sector received a jolt earlier this month when the Mexico Supreme Court ruled America Movil should not be barred by law from charging its rivals interconnection fees, finding the fees should be set by the IFT.

Speaking at the OECD event, IFT leader Gabriel Contreras said the regulator was still studying the so-called “zero-rate” issue but stressed that the IFT was up to the task. “We carry out our obligations,” he said.

Reporting by Julia Love; Editing by Dan Grebler and Bill Trott

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