Carlos Slim offers to shrink his Mexico telecoms empire

Reuters News
Posted: Jul 08, 2014 6:13 PM

By Christine Murray

MEXICO CITY (Reuters) - Billionaire Carlos Slim's America Movil said on Tuesday its board voted to divest assets to cut its Mexico telecommunications market share below 50 percent and avoid tough new regulations designed to curb his long-held dominance of the sector.

The company, which controls about 70 percent of Mexico's mobile market and 80 percent of the fixed-line business, said in a statement it was ready to sell assets to a new, independent company. It did not specify which assets, and a spokesman said the company did not know who it could sell them to.

However, any divestitures would be "conditional" on America Movil's mobile and fixed-line units no longer being designated dominant players, the company said.

America Movil is being forced to slash costs it charges other companies to complete calls on its network and share infrastructure after a new market regulator declared it dominant in the fixed-line and mobile phone markets.

President Enrique Pena Nieto pushed a telecommunications reform through Congress last year that was designed to rein in Slim as well as top broadcaster Televisa.

America Movil added that after selling the assets, it expected to be allowed to offer all telecommunications services, which include pay TV.

Slim's fixed-line business Telmex was banned from entering the country's television market when Mexico's former state telecoms monopoly was privatized in 1990.

The new laws currently being finalized mean Slim could not expect to have access to the television sector while he still held more than 50 percent of the telecoms market.

The company also said it would "separate" its cellphone towers and other infrastructure. It did not elaborate.

America Movil's move came as the lower house of Congress was approving legislation needed to flesh out the powers of market regulator, the Federal Telecommunications Institute (IFT).

Under the new laws, Slim must present his plan to the IFT. If it accepts it, the plan must be executed within a year.

The IFT must then determine whether competition exists in the market. If so, America Movil and its subsidiaries will no longer be considered "dominant" and will not be subject to the measures currently in force against them.

America Movil also said in its statement that it would renounce its option to buy a majority stake in satellite television company Dish Mexico. It has a billing arrangement with Dish Mexico, which competitors say violates its exclusion from TV. The relationship is being investigated by the IFT.

(Additional reporting by Dave Graham and Michael O'Boyle; Editing by Mohammad Zargham)