Mexican telecoms sector reforms take shape

12 Mar 2013

The Mexican government has outlined proposals which look set to significantly reform the country’s telecoms sector. According to the Wall Street Journal, Latin American telecoms giant America Movil (AM), which is controlled by the world’s richest man, Carlos Slim, and Mexico’s biggest broadcaster Grupo Televisa are two of the companies expected to be most affected by the new legislation.

It is understood that the government is calling for the creation of a new telecoms regulator – the Federal Telecommunications Institute (FTI) – which would have the power to order those companies adjudged to dominate their market to sell off assets. The new entity would also be able to limit companies from seeking to stall competition through continued litigation, with special courts expected to deal with regulatory disputes, and prohibit companies from blocking regulatory decisions though legal means while they are being challenged in court. In addition, the state’s proposals will lift restrictions on foreign ownership on companies providing fixed line telecommunication services, while the government is planning to set up a state-run carrier of carriers with a view to ensuring it meets its target of ensuring 70% of homes and 85% of businesses have access to the internet.

‘This is going to change very rapidly the reality of the market, and increase competition in the country,’ said Jose Luis Peralta, a commissioner at current regulator Cofetel, which will be replaced by the FTI, adding that the new regulatory body ‘is being given lots of teeth’. For its part, in a statement following the announcement of the reforms, AM said it welcomed the proposal and its objectives, adding that the company will continue investing, competing, and lowering prices to consumers.

The proposals are still subject to changes by legislators, but the unprecedented support for the measures from the country’s major political leaders is widely thought to give them a good chance of being passed in Congress.