--Company says OECD's report overstates real costs
--Plans to call attention of Mexican regulators to
objections
--Mexican regulators considering asymmetric regulation for
Telcel
By Anthony Harrup
MEXICO CITY--Mexican telecommunications company America Movil
SAB (AMX, AMX.MX) renewed its criticism Thursday of a report by the
Organization for Economic Cooperation and Development, which it
said overstated actual cost of services to consumers and used a
separate methodology to evaluate America Movil's unit Telcel.
America Movil's chief financial officer, Carlos Garcia Moreno,
said in a webcast presentation that the company has received dozens
of calls from investors about the OECD report, which was released
in January 2012.
America Movil, controlled by billionaire Carlos Slim, called the
report flawed and in May asked for it to be withdrawn. The OECD
said it stood by the report and its findings, in which it estimated
that high telecommunications prices cost Mexican consumers over $25
billion a year in overcharges and foregone services, and also
recommended asymmetric regulation.
The report was commissioned by Mexico's telecommunications
regulator Cofetel, which is currently considering whether to apply
asymmetric regulation, such as forcing Telcel to pay more than it
charges to complete calls on competing networks.
Telcel has about a 70% share of Mexico's wireless phone
subscribers with 69 million at the end of September. Its
competitors are Spain's Telefonica SA (TEF), Iusacell, a
joint-venture of Grupo Televisa SAB (TV, TLEVISA.MX) and Grupo
Salinas, and NII Holdings Inc. (NIHD) unit Nextel Mexico.
Mr. Garcia Moreno said Thursday that the company will bring its
findings to the attention of Cofetel. "I would think that Cofetel
had wanted an adequate diagnosis of the sector," he said.
America Movil has long objected the OECD's use of
purchasing-power parity, or PPP, to compare telecommunications
prices. In the case of Mexico, it shows prices 40% higher in dollar
terms than they would be at market prices, Mr. Garcia Moreno
said.
The official said the basket of services the OECD used to
compare Mexico with other countries wasn't the most representative
of Telcel's mostly prepaid customers, that the price data excluded
bonuses granted to prepaid customers who, for example, buy 500
Mexican pesos of air time and receive MXN900 in credit. It also
ignored the effect on average prices of free "on-net" calls to
prespecified numbers.
"Our analysis revealed that for Telcel, alone among 68
operators, a unique methodology had been devised," Mr. Garcia
Moreno said.
America Movil's shares have languished this year, down 6.4% from
the end of 2011 as the local market's benchmark IPC index has risen
14%. Increasing competition, heightened regulatory pressure and the
economic slowdown, particularly in Brazil, have contributed to
holding the shares back.
Analysts have offered differing views on the impact that
asymmetric regulation in Mexico would have on America Movil.
Citi unit Banamex last month downgraded America Movil to neutral
from buy, citing the possibility of asymmetric interconnection
rates among challenges for 2013. Barclays Capital, meanwhile,
maintained its overweight rating and played down the importance of
asymmetric regulation.
"Wireless voice prices and MTRs (mobile termination rates) in
Mexico are the lowest in Latin America. As a result, we believe a
potential implementation of asymmetric interconnection rates would
have very limited impact," Barclays said, adding that the
increasing shift from voice to data will further limit any
effect.
Write to Anthony Harrup at anthony.harrup@dowjones.com
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