América Móvil and Grupo Televisa – Mexico’s largest phone company and its largest TV broadcaster, respectively – were told by the country’s new Federal Telecommunications Institute (IFT) that they were placed under preliminary review to determine whether they are dominant players in the telecommunications sector. América Móvil is controlled by Mexican billionaire Carlos Slim Helú, and Televisa by fellow billionaire Emilio Azcarraga Jean.
According to Mexican experts, there is little doubt that both América Móvil and Televisa will be declared “market dominant.”
América Móvil CEO Daniel Hajj anticipated that the company was likely to be declared dominant, but said in the spring that it would be premature to make decisions such as divesting assets.
In a release on December 5, América Móvil (NYE:AMX) acknowledged having received a notice from the IFT “related to the beginning of a process toward the probable determination of being a predominant economic agent (agente económico preponderante)” and informing them about “possible imposition of regulatory measures.” América Movil observed that in this first stage, regulators seek to gather information.
According to wire services, Televisa (SAB), the world’s largest producer of Spanish-language content, also said it was analyzing the IFT news and preparing an official response.
Through Telmex, América Móvil currently controls 80% of Mexico’s landline phone market, and through Telcel, 70% of the wireless market. Televisa captures close to 70% of Mexico’s broadcast television audience. These companies have become powerful symbols of entrenched interests in Mexico.
Deciding whether América Móvi and Televisa monopolized Mexico’s telecom market is part of a new bill designed to boost competition, recently approved by the Mexican Congress.
Under the new law, IFT has the power to revoke operating licenses due to monopolistic practices and stop companies from controlling more than 50% of market share. IFT President Gabriel Contreras has said, however, that those measures would only be used as a last resort.
IFT has 180 days (until March 9) to issue its final findings. América Móvil and Televisa will most likely use this period to try to defend themselves and convince IFT that they are not “dominant players.” Arturo Elías Ayub, Slim’s spokesperson and son-in-law, did not respond a request for comment.
For América Móvil, the issue revolves around which measures regulatory authorities might decide to apply to boost competition, measures such as creating a price regime to aid smaller rivals or forced sharing of infrastructure.
Slim Helú has long argued that he doesn’t run a monopoly. Last week he said that although it’s important to avoid “monopolistic practices,” the telecom industry “is not a business in which many companies get involved.”
To make his point, at an event in Mexico City, Slim said that Germany has Telecom, Spain Telefónica, and the U.S., AT&T and Verizon.
He opined that in any market there will always be companies with a stronger presence, stronger sales and more customers than others. This, he said, happens even in businesses that sell “tamales and popsicles.”
Slim argued, therefore, that the focus should be on attracting more investment in telecommunications and called for “everybody to invest and that the one that invests most be the one that advances.”
In this year’s World’s Billionaires list, Forbes estimated Slim’s net worth at $73 billion (making him the world’s richest person) and Azcarraga’s at $2.5 billion. In May, Slim was overtaken by Bill Gates as the world’s richest man. Slim’s net worth is now $71 billion, based on Friday’s stock prices.
Twitter: @DoliaEstevez
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