MEXICO CITY--Mexican tycoon Carlos Slim's telecommunications
company América Móvil was ordered by a new powerful regulator to
"substantially" cut some of its tariffs, the latest evidence that
new telecom rules will trim the company's profit margins in its top
market, Mexico.
America Movil was forced to cut the rates it charges to complete
calls from competing networks for the period from April through
December, the company said in a statement to the Mexican Stock
Exchange. América Móvil said that starting April 6, wireless unit
Telcel can charge competing carriers 20 Mexican cents--just under 2
U.S. cents--a minute for incoming calls, down from the current 31
Mexican cents.
Competitors such as Spain's Telefonica SA, Grupo Iusacell and
NII Holdings Inc. unit Nextel México will be able to charge more
for completing calls on their networks.
Interconnection rates at fixed-line unit Telmex were set at
about a 10th of the mobile rates.
The rates are meant to help smaller telecoms compete with
América Móvil, which controls around 70% of Mexico's fixed and
mobile phone lines, and to lower fees for consumers.
The regulator could order new rates for 2015, or renew the ones
it has mandated for the remainder of this year. The move was widely
expected, although América Móvil said the rates represented a sharp
decrease.
"The referred tariffs in the resolution are comparatively lower
than the ones currently in force for the same services in most
countries," América Móvil said.
América Móvil was declared dominant in its business in early
March by a new telecom regulator created last year. As such, the
company faces more severe regulatory conditions than smaller rivals
in its industry as the regulator aims to level the playing
field.
América Móvil shares traded on the New York Stock Exchange have
fallen more than 12% this year, having closed Monday at $19.88.
The telecom regulator's decision comes at a moment when the
Mexican Congress had started discussions on a telecom bill
presented by President Enrique Peña Nieto that establishes tough
regulation for dominant players.
The bill established that domestic long-distance charges will be
phased out over three years and that América Móvil, like giant
broadcaster Grupo Televisa, will be required to share
infrastructure with competitors.
The new interconnection rates are still above the zero
termination rates for dominant companies called for in the proposed
new telecommunications law.
América Móvil last week described the zero-tariff measure as
confiscatory, saying it would reward lack of investment by its
competitors and discourage investment and innovation in the
industry.
Anthony Harrup contributed to this article.
Write to Juan Montes at juan.montes@wsj.com
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