In an unprecedented blow to billionaires Carlos Slim and Emilio Azcarraga, Mexico’s Federal Telecommunications Institute (IFT), declared phone companies Telmex and Telcel, as well as television giant Televisa, dominant in their respective markets and ordered them to open up to domestic and foreign competitors.
The ruling by the newly created IFT imposes tough anti-monopoly measures on the companies which will force them to share their infrastructure, increase competition, lower prices and expand access to services such as broadband and pay television to decrease their power.
América Móvil (NYE:AMX), Slim’s telecom conglomerate and largest asset, currently controls 80% of Mexico’s landline phone market through Telmex, and 70% of the wireless market, through affiliate Telcel. Azcarraga's Televisa has 70% of the broadcast television market and around 56% of cable and satellite television combined. The law sets a market share cap for both telephones and TV of no higher than 50%.
The decision to declare them market dominant was made by the IFT on Thursday. On Friday, América Móvil issued a statement in response to the IFT's ruling. The company said it will be analyzing it from an "economic, technical, regulatory, operating and business perspective in order to be able to evaluate its effects."
In a written statement also on Friday, Televisa confirmed the IFT’s decision against the network. Televisa said that under the new ruling the company will be required to let competitors use its broadcast towers for a fixed fee and publish its advertising prices publicly. It added that after reviewing the ruling it will determine what actions to take -- “legal, business, or otherwise.” “All of the resolutions and actions from the IFT affect Grupo Televisa in many areas associated with its (TV and pay-TV) businesses," the company said.
The IFT also announced on Friday that it had opened biding for two new national television broadcast network concessions, which would weaken Mexico's duopoly Televisa and TV Azteca. According to the announcement, published in Mexico’s official record, bidders must apply by June 17 for the auction and will learn if they are qualified by September 9. Televisa and TV Azteca are not allowed to bid. But Slim, who until now has been banned from the broadcasting industry, is expected to compete for one of the two private TV networks called for by the new telecom law.
The IFT, an independent regulatory panel, was created in 2013 as part of a monopoly-busting telecom legislation designed to boost competition in Mexico’s telephone and television sectors. In December, the IFT told América Móvil and Grupo Televisa that they were placed under preliminary review to determine whether they were dominant players in the telecom sector. March 9 is the deadline set for the ITF to issue its final findings.
The IFT ruling, therefore, came as no surprise. It was widely expected that the regulatory authorities were going to confirm what has long been a complaint by Mexican consumers, namely the extraordinary power enjoyed by a small group of companies. In a recent interview with Mexican leading radio news cast Noticias MVS, Arturo Elías Ayub, Slim’s spokesperson and son-in law, accepted that Telmex and Telcel would most likely be declared “preponderant economic agents”, the legal term used under Mexican law.
With a net worth of $72 billion, Slim is the world’s second richest man in Forbes 2014 Billionaire list. With a $2.6 billion fortune, Azcarraga is Mexico’s 9th richest person.
Twitter: @DoliaEstevez
