Mexico watchdog weighs if America Movil, Televisa dominate sector

Reuters

MEXICO CITY, Dec 5 (Reuters) - Giant Mexican telco AmericaMovil and broadcaster Televisa, the twocompanies likely to be most affected by the country's telecomsreform, said on Thursday the regulator has told them it wasdetermining whether they are dominant players in the sector.

The notifications are the first step in a process mandatedby a telecoms reform passed by Mexico's Congress earlier thisyear that gives the new Federal Telecommunications Institute(IFT) powers to clamp down on dominant players and spurcompetition.

Televisa, the world's largest producer of Spanish-languagecontent, said in a regulatory filing it was analyzing the newsand preparing an official response.

America Movil, the telecoms behemoth controlled by Mexicanbillionaire Carlos Slim, later said that it and itssubsidiaries, including fixed-line operator Telmex, have alsobeen placed under review by the watchdog and asked to hand overinformation about the size of the market.

America Movil said it had received a notice "related to thebeginning of a process toward the probable determination ofbeing a dominant economic agent in Mexico's telecommunicationsmarket.

The company had already said it expects to be declareddominant.

America Movil shares ended down 1.69 percent at 14.55 pesos($1.12) before the company disclosed the review. Televisa'sshares closed down 2.1 percent, having fallen more than 3percent earlier on the news.

On Wednesday, the IFT said it had informed unidentifiedcompanies it will assess for tougher regulation.

Under the new rules, the IFT has powers to break up telecomscompanies that are found to be impeding competition, althoughthose powers are only intended to be used as a last resort.

The IFT, which has until March to determine which firms are"predominant," can also apply other measures to drivecompetition, including forced sharing of infrastructure andcreating a price regime to aid smaller rivals.

America Movil and Televisa have spent years battling effortsto impose tougher rules on how they operate, using legalinjunctions and appeals to thwart regulators. Much of that legalcover has been stripped away by the reform.

The reform allows companies to argue why they believe theyare not dominant, and both Televisa and America Movil areexpected to fight their ground.

Secondary legislation to implement the telecoms reform hasbeen delayed, giving the likely targets more time to preparetheir defenses. Congress is expected to begin looking at thesecondary legislation in February.

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