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America Movil Finally Hit by Long-Expected Regulatory Blow

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Mexico's competition regulator has unveiled a string of reforms that are designed to curb the power of the dominant teleco, America Movil, although they have stepped back from forcing a break up of the company.

The Mexican government passed legislation last year, after many years of delays to introduce more competition into both the telecoms and the broadcasting industry, both of which are dominated by two major owners.

America Movil currently controls about 80 percent of Mexico's landline business via its Telmex unit and some 70 percent of the mobile sector through its Telcel unit.

In its new ruling, the Federal Telecommunications Institute (IFT) has deemed America Movil to be a dominant operator under the terms of the new legislation, and is now empowered to impost tougher regulations on the company.

One of the first will be a ban on charging national roaming fees, a mandate for infrastructure sharing and tighter regulation of interconnection fees.

Further action could be taken, but not for another two years. One option open to the regulator is to force the company to sell assets, or some of its customer base to its rivals to bring its market share down to below 50 percent.

One aspect that could delay the regulatory clamp-down is that secondary legislation approving the powers still needs to be passed by the politicians, and has been delayed.

The delay was for once less to do with lobbying and political disagreements, as has blocked previous attempts to reform the market, than a simple back-log of other legislation that wasn't cleared by the end of the current period of Congress.

Javier Lozano, head of the Senate's transport and communications committee recently said that he expects the reforms to bring America Movil's market share to below 50 percent by 2018.

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Tags: america movil  Mexico