--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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