Spain's Telefó nica to Challenge Mexican Regulatory Fine
November 10 2015 - 1:30PM
Dow Jones News
MEXICO CITY—The Mexican unit of Spanish phone company Telefó
nica 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 Leó
n, 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.
Telefó nica 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 Leó
n.
"Under those conditions of saturation, the functioning of the
Telefó nica network was optimal," the company said in a
statement.
Telefó nica 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.
Telefó nica 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. Telefó nica Mé xico reported an
18% increase in third-quarter revenue to €453 million ($485
million), helped in part by regulatory changes in Mexico such as
asymmetric regulations on dominant carrier Amé rica Mó vil.
Telefó nica Mexico invested €164 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 13:15 ET (18:15 GMT)
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