Senate could consider foreign investment limit changes next week

20 Nov 2009

According to Reuters, Mexican senators may consider proposed changes to foreign investment limits in fixed line telcos next week. In a move that could threaten the dominance of Telefonos de Mexico (Telmex), which currently controls approximately 85% of the Mexican fixed line voice market, Senator Marko Cortes, who has proposed the legislative changes, said that Senate committees are currently debating details of a reciprocity clause which would allow unlimited investment to those countries offering similar terms to Mexico. Those supporting the proposal have argued that it would help enhance competition against Telmex, and thereby reduce the cost of calls for smaller operators, with Cortes noting: ‘Through this initiative, we want Mexicans to pay lower bills for their telephone and Internet. Competition is the best way to create better prices.’

It is thought that the Senate could vote on the proposal as early as next Tuesday. Should lawmakers approve the plan smaller operators including Axtel, Megacable and Maxcom would likely become acquisition targets for larger international companies, such as Spain’s Telefonica.