America Movil, controlled by Billioniare Carlos Slim, said that the telecommunications regulator of Mexico had stepped up its antitrust rules against America Movil. This cranking up includes the order to the company to separate their fixed line infrastructure out of their main company.
The complete family of Slim share controlling interest in America Movil and this company has been subjected to tough regulations since the better part of 2014. This is as a part of a reform of sweeping sector type, which has been aimed to make the current market more and more competitive, even for the big players.
The company said that the Federal Telecommunications Institute or IFT ordered America Movil to create a completely separate entity from their fixed line unit called Telmex. This was to offer their competitors access to the infrastructure. This was confirmed by a report in February by Reuters, which depicted that this kind of change was being considered.
The requests to IFT to comment on the matter were not immediately responded by the IFT spokesperson.
America Movil’s statement to Mexican Stock Exchange said that this functional separation is based on a clear plan that was presented by Telmex for approval to IFT.
After the company described what this resolution required, the company criticized it. The company said that they were analyzing the resolution and will soon challenge the decision put forth.
The company added that the additions and modifications to these measures had a lack of regulatory predictability and legal certainty in the entire sector in which the company operates.
A Mexico CID university researcher, Alexander Elbittar, who considers himself to be a specialist in competition and regulation, had some views on the matter. He said that he was not surprised that Carlos Slim’s America Movil is thinking of challenging the resolution as a way of keeping their legal options open.
He emphasized that it is yet to be seen how the Telmex unit proposes to structure the separation that is going to take place, but at the same time he said that the overarching resolution seems to be really sound.
Elbittar said that the measure is a really drastic one, but it is inevitable in these markets as the markets feature a very strong concentration for a lot of years in terms of market power.
IFT voted for this rule last week and it was as a part of a review of all the antitrust rules in a periodic manner.
America Movil has seen a drop in their home profit margins from 45 percent to an amount less than 30 percent ever since the antitrust rules were imposed. The company still holds a market share of wireless telecommunication of as much as 70 percent.