Mexican telecom behemoth America Movil SAB (AMX) is yet to take the final decision on which telecom assets to divest in order to comply with the latest government directive. The government of Mexico has decided to reform its highly monopolistic telecommunications sector, predominantly the wireline and wireless phone segments and the cable and satellite TV segments.
The intension behind this reform is to instill competition by encouraging the entry of other operators. This in turn will reduce the price of telecom and broadcasting services for the common people.
In this regard, regulator Federal Telecommunications Institute, which is popularly known as IFT, identified telecom behemoth America Moviland broadcasting giant Grupo Televisa SAB (TV) as the dominant players in the respective markets.
America Movil’s wireline division, Telmex, currently controls around 80% of the Mexican market, whereas its wireless division, Telcel, holds about a 70% market share. The IFT wants to restrict the maximum hold of a company in the market to 50%.
As stringent measures, IFT will ban America Movil from charging national roaming fees. Further, the company will have to share its infrastructure with other operators particularly in the local loop (last mileage) segment. Interconnection fees levied by America Movil will also be closely monitored.
America Movil has formed a committee to strategically assess various structural, commercial, technological opportunities available to the company after the imposition of the new regulations. According to industry sources, the company is negotiating with several foreign telecom giants including AT&T Inc. (T), Bell Canada, China Mobile Ltd. (CHL) and SoftBank Corp. to divest some parts of its telecom assets.
Nevertheless, the new regulations will allow America Movil to enter the broadcasting market of Mexico, which has been controlled by Televisa for a long time. In fact, America Movil had been eager to enter this market with its existing telecom network earlier.
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