--Antitrust commission rejects appeal by America Movil unit Telcel

--Ruling opens way for asymmetric regulation on Telcel

--America Movil says it is analyzing the decision

By Anthony Harrup

MEXICO CITY--Mexico's antitrust commission said Thursday it has confirmed an earlier ruling that America Movil SAB (AMX, AMX.MX) unit Telcel is dominant in the Mexican mobile-telephony market, a ruling that could open the door for the telecommunications regulator to apply specific rules to the company given its market power.

America Movil, controlled by billionaire Carlos Slim, had appealed against the dominance ruling by the Federal Competition Commission, or CFC. The CFC said commissioners voted unanimously on Feb. 28 to uphold the earlier ruling.

A representative for America Movil said Thursday that the company is analyzing the latest decision by the antitrust commission.

Telcel has around 70% of the country's 100 million mobile subscribers, in a market where it competes with Spain's Telefonica SA (TEF, TEF.MC), NII Holdings Inc. (NIHD) unit Nextel Mexico, and Grupo Iusacell, which is half-owned by television heavyweight Grupo Televisa SAB (TV, TLEVISA.MX).

Confirmation of the ruling comes as the Mexican Senate debates a telecommunications and media-reform bill, already approved by the lower house of Congress, that would give regulators increased ability to rein in the power of companies considered dominant in the television and telecommunications markets.

The proposal would create a Federal Telecommunications Institute to replace the existing telecommunications regulatory commission Cofetel, which would have expanded powers and some responsibilities currently held by the Communications and Transport Ministry. The new regulatory body would take over competition issues in telecommunications from the CFC, and would have the power to order asymmetric regulation, unbundling of services, or even asset sales by dominant players.

The bill says any companies with market shares exceeding 50% would be determined to be dominant, although it doesn't make clear how it would affect rulings by existing regulators.

America Movil's shares have been the hardest hit by the proposed overhaul. The shares have fallen 8.3% since March 11, when the legislation was submitted to Congress by President Enrique Pena Nieto, and are down 20% in the past year, closing Thursday at 12.47 pesos ($1.01).

In a report this week, investment bank UBS said that in the short term, it expects the reform would lead to asymmetric pricing for Telcel, and the unbundling of access at America Movil's fixed-line unit Telmex. Under asymmetric regulation, Telcel could have to pay competitors more to complete calls to their networks than it charges them for incoming calls on to its own network.

UBS said that although America Movil will bear the greatest burden of the new measures, downside to the current share price is limited.

The reform proposal also opens the possibility that Telmex could be authorized to enter the television market, where Televisa has about a 70% market share.

Write to Anthony Harrup at anthony.harrup@dowjones.com

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