New Regulations Attempt To Stimulate Investment in Mexico Telecoms

      Mexico - Anti-monopoly legislation in telecommunications is forcing American Movil to unexpectedly sell part of its business.  Reforms orchestrated by President Enrique Pena Nieto are intended to limit the size of some of Mexico's largest telecommunication companies.
     The announcement came during a 20-hour session to put into affect laws that follow up on last year's constitutional reforms on telecommunications and broadcasting.  The laws which the lower house of Congress approved July 9, 2014, are far reaching.   According to Business Week magazine, these laws will abolish long-distance phone charges next year, they will make it easier for customers to switch telephone companies, and broaden access to free-to-air- television stations.  This legislation will be judged by how well, or not, these laws curb the power of two companies, American Movil and Televisa (a TV broadcaster).  As long as the two firms have a market share of more than 50 percent in their respective businesses, the legislation subjects these two companies to stringent pricing rules.  One executive at American Movil, says American Movil seeks to cut its market share by 15-20 percentage points.  That will put American Movil out of the "preponderant" (dominating) firm category.  American Movil's market share is now sixty percent.  The executive did not say whether the part of the business that American Movil is selling will come from its fixed line, mobile, or internet service branches of the company.  Or, whether that fifteen to twenty percent reduction of market presence will come from a combination of all three.  Also, at issue in the partial divestiture is whether American Movil has to share it wires or its mobile-phone towers, when it becomes a normal (non-preponderant) company.  The executive, a son-in-law of American Movil's owner, said the sale would be to a strong competitor.  Stock speculators say interest is focused on AT&T, of the United States of America, which divested its stake in American Movil last month.  The sale depends on whether a new regulator, the Federal Telecommunications Institute (IFT), approves the plan.  American Movil could be litigating these issues  in front of a judge and jury for "up to two years," says a boss of one of American Movil's competitors.  Also, according to Business Week, American Movil's stock price for its shares surged on the announcement of a partial sell-off of American Movil.  See full story,  www.businessweek.com.