Mexico telecoms reform could take years to unseat Slim

Fri Mar 14, 2014 4:20pm EDT
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By Christine Murray

MEXICO CITY (Reuters) - Tycoon Carlos Slim, under fire from regulators in his home country, has spent the last two years sniffing out deals in Europe to offset an impending regulatory shake-up of Mexican telecoms.

But though the reforms are the furthest-reaching measures passed against Slim since he became the dominant force in Mexico's telecoms market more than two decades ago, they are likely to take years to erode his hold on the business.

Slim's America Movil, which controls 70 percent of the Mexican mobile market and 80 percent of its fixed lines, was singled out for tougher measures last week by the Federal Telecommunications Institute (IFT), the new market regulator.

His Mexico phone units must now present plans to lower rates for rivals using America Movil's mobile network, eliminate roaming charges, open up the fixed-line network and share transmission towers, ducts and other nonelectronic infrastructure.

It could have been worse. The IFT could have ordered the company to divest assets, and analysts forecast that Slim will still hold 60 percent of the market in a few years.

"We aren't that worried," a top-20 America Movil shareholder told Reuters on condition of anonymity. "We think the company has suffered a lot and that the prices and valuation of the shares incorporated a worse scenario with regards to (IFT)."

America Movil's share price fell to a near four-year low the day after the government presented the reform that created the IFT in March 2013, and it remains well below mid-2012 levels.

Since last week's announcement the stock was up 0.85 percent to 13.09 pesos at Thursday's close.   Continued...

Mexican billionaire Carlos Slim attends the presentation of a digital platform to promote Mexico's natural heritage inside Soumaya museum in Mexico City December 2, 2013. REUTERS/Edgard Garrido