AM confirms regulator’s Telmex ‘functional separation’ order

9 Mar 2017

America Movil (AM) has confirmed that it has received a resolution issued by the Federal Telecommunications Institute (Instituto Federal de Telecomunicaciones, IFT) related to the watchdog’s evaluation of the asymmetrical regulations first imposed on the group’s Mexican units back in March 2014. The regulations relate to the ‘preponderant economic agent’ (agente economico preponderante) status afforded to Radiomovil Dipsa (Telcel), Telefonos de Mexico (Telmex), and Telefonos del Noreste (Telnor).

Alongside a number of modifications to the existing asymmetrical regulations, the IFT has ordered a ‘functional separation’ of Telmex’s fixed line retail and wholesale divisions in an effort to stimulate competition. As such, AM will be forced to incorporate a legal entity independent from Telmex/Telnor which will exclusively provide wholesale services related to local loop access and the use of its passive infrastructure.

For its part, AM believes that the IFT resolution is ‘not based on an integral evaluation in terms of competition, nor does it consider the profound changes in the Mexican telecommunications sector within three years from the imposition of the asymmetric regulations’. Going forward, AM says that it is reviewing the resolution and analysing its possible effects on AM and its subsidiaries; the resolution will be challenged in accordance with applicable law.