Ifetel: AM could yet avoid tougher sanctions

30 Mar 2015

Mexican regulator Instituto Federal de Telecomunicaciones (Ifetel) has admitted that it will not necessarily impose tougher rules against Carlos Slim’s America Movil (AM) if it does not sell off assets as planned, and reduce its market shares in the country’s fixed and mobile markets below 50%. Reuters quotes Ifetel president Gabriel Contreras as saying: ‘The problem of the market is not the size of the operator. This is a market with economies of scale, it is capital intensive. The problem is having that power and abusing it.’

Previously, in March 2014 Ifetel identified Carlos Slim-owned AM – the parent company of fixed line operator Telefonos de Mexico (Telmex) and mobile unit Telcel – as holding significant market power (SMP) in the telecoms sector, and compelled Slim to take proactive measures to reduce its overall influence within the Mexican marketplace. However, AM has experienced a lukewarm response to its informal divestment plans, with industry insiders bemoaning the vague nature of the assets involved, and the disproportionately high price attached to them.

As at 31 December 2014 Telcel claimed a 68.0% share of the Mexican wireless market, placing it comfortably ahead of Movistar Mexico (20.6%). The market is rounded out by Iusacell (8.8%) and Nextel (2.6%), both of which have recently been acquired by US heavyweight AT&T, ahead of its long-awaited entry into the Mexican mobile sector. AM representatives have already noted that the new AT&T venture will come into the market as the second biggest revenue earner, comfortably surpassing Movistar in terms of revenue, and altering the competitive landscape dramatically.