AM: AT&T entry could dent ‘preponderant economic agent’ status

12 Feb 2015

AT&T Inc’s eagerly anticipated entry to the Mexican wireless market could help America Movil (AM) avoid ‘preponderant economic agent’ status, according to the latter’s CEO, Daniel Hajj. During the company’s 4Q results conference, Hajj noted that the new AT&T venture – which will comprise the merged operations of the country’s third and fourth largest cellcos Iusacell and Nextel Mexico – will come into the market as the second biggest revenue earner, comfortably surpassing Telefonica (Movistar) in terms of revenue, and altering the competitive landscape.

As previously reported by TeleGeography’s CommsUpdate, AM owner Carlos Slim is ready to sell off parts of his Mexican telecoms business in an effort to cut his company’s market share across the sector to below the 50% mark, thus avoiding regulations that apply only to dominant players, and cease being a ‘preponderant economic agent’. Hajj commented: ‘If we are going to divest assets from AM, we will do so at a new market price and in a competitive landscape that is changing. We are still in the process of doing that, of looking at how to reduce our market share.’

In September 2014 it was reported that AM had contacted four potential suitors – AT&T, Softbank Corp of Japan, Bell Canada and China Mobile – with a view to selling Telmex and Telcel in a deal worth up to USD20 billion. However, front-runner AT&T went on to strike a USD2.5 billion deal for Iusacell, which it followed up with a separate USD1.875 billion move for Nextel. Meanwhile, AM has experienced a lukewarm response to its own divestment plans, with industry insiders bemoaning the vague nature of the plans, and the disproportionately high price.