Spain's Telefónica to Challenge Mexican Regulatory Fine
November 10 2015 - 1:24PM
Dow Jones News
By Anthony Harrup
MEXICO CITY--The Mexican unit of Spanish phone company
Telefónica SA said Tuesday it intends to challenge a 410.9 million
peso ($24.5 million) fine imposed by telecommunications regulators
over service failures in a central city.
The Federal Telecommunications Institute, or IFT, said a
monitoring process in January of this year showed the company
failed to meet minimum quality standards in the central city of
León, where a high proportion of attempted calls were dropped or
failed to connect. The IFT said commissioners voted 5-2 in favor of
the fine, the highest the institute has imposed since its creation
in 2013.
Telefónica said it considered the fine, based on 1% of its
revenue for all of Mexico and not just the region, was
"disproportionate and unjustified."
The company also questioned the findings, saying that between
Jan. 18 and Feb. 17 the company completed 2,688 calls successfully
in the area while only 112 failed. The period also coincided with a
regional fair that saw four million people visit the city of
León.
"Under those conditions of saturation, the functioning of the
Telefónica network was optimal," the company said in a
statement.
Telefónica said that kind of action by authorities, rather than
promote better service, is likely to discourage investment in the
country. "It also sets a negative precedent for all operators,
since this kind of inconsistent measurement subtracts credibility
from the authorities."
Officials of the IFT couldn't immediately be reached for
comment.
The IFT was set up in 2013 under an overhaul of
telecommunications laws. The institute is responsible for
regulating the sector, including antitrust issues such as
determining dominant players in the market.
Telefónica is the country's second-largest mobile phone operator
by subscribers, with 23.4 million at the end of September, a 14%
increase from a year earlier. Telefónica México reported an 18%
increase in third-quarter revenue to EUR453 million ($485 million),
helped in part by regulatory changes in Mexico such as asymmetric
regulations on dominant carrier América Móvil.
Telefónica Mexico invested EUR164 million in the first nine
months of the year, mostly in expanding network coverage and
capacity.
Write to Anthony Harrup at anthony.harrup@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
November 10, 2015 13:09 ET (18:09 GMT)
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