Antitrust move may let America Movil cut labor costs: union

Thu Mar 16, 2017 10:51pm EDT
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By Dan Freed

MEXICO CITY (Reuters) - Antitrust measures announced last week that would split up Carlos Slim's America Movil and open its fixed line network to competition may help Mexico's dominant telecommunications provider reduce labor costs, according to a labor union spokesman.

The announcement initially hammered the company's shares, though they have since rebounded and closed at 13.60 pesos each on Thursday.

The new rules drew opposition from a labor union representing 60,000 workers at America Movil's fixed line unit, known as Telmex.

The reorganization would create a new entity that could hire new workers and pay them less than under the existing contract, said Eduardo Torres Arroyo, spokesman for the Mexican Telephone Workers' Union (STRM).

"That possibility exists," Arroyo said. "We're trying to keep that from happening."

Paula Garcia, spokeswoman for America Movil, declined to comment on whether the company's labor costs could be reduced or not as a result of the new rules.

STRM has threatened a strike if the rules are not changed, though the union has not had a major walkout since 1982.

Mexico's regulator, the Federal Telecommunications Institute (IFT), is looking to increase access to America Movil's fixed line network while attracting capital for the network's expansion, according to Alexander Elbittar, a researcher with Mexico's CIDE university who specializes in regulation and competition.   Continued...

The logos of America Movil is seen on the wall of the reception area in the company's corporate offices in Mexico City August 12, 2015.   REUTERS/Henry Romero