America Movil to Sell Mexican Assets to Avoid Regulatory Squeeze
Published on: 9th Jul 2014
America Movil's dominance of the Mexican mobile market seems close to an end after the company announced plans to sell assets to bring its market share down to below 50 percent.
The move should forestall swinging regulatory action which would have resulted in pretty much the same result over a number of years.
The company said that it is looking to sell assets fairly quickly, and would prefer to sell to a single bidder than carving up assets amongst a number of buyers. Reading between the lines of the company statement, it seems unlikely that they would want to sell to an incumbent rival in the country.
Introducing a new rival mobile network into the market would be beneficial to America Movil and it would prevent any of the smaller companies gaining enough market share to be a serious competitor to it. At least in the short term.
Legislation to reform the telecoms market is passing through the government at the moment and just needs to be signed by the President to become effective.
That would have seen America Movil declared a dominant player, and would have seen the regulator granted powers to impose strict conditions on the company in order to force its market share to below 50 percent.
The divestment plans includes the sale of mobile towers and related infrastructure to be operated and marketed by a separate company. That could boost the ability of the smaller rivals to expand their networks and secure nationwide coverage.
However, the offer to sell assets is conditional on the regulators permitting the company to enter the television market, which is also being subjected to similar monopoly reviews.
The regulators have indicated that they would not offer a TV license to America Movil though, leading to some uncertainty about the company's eventual decision to sell down its assets.