Mexican telecom overhaul regulation targets Carlos Slim's business

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An ongoing move by the Mexican government to overhaul its telecommunications industry has direct implications for billionaire telecom mogul Carlos Slim, perhaps even resulting in the break-up of América Móvil, Slim's all-encompassing telecommunications firm.

Supporters of the legislation, which passed the Mexican Senate July 5 and is now being debated by the lower house, claim the new law will open up competition that has been lacking since the state's monopoly service, Telefonos de Mexico (Telmex) was privatized and acquired by Slim in 1990.

The law would force Slim's company to share parts of its network with competitors and reduce fees it charges other operators to connect calls to its customers. With 80 percent of Mexico's landlines, América Móvil does have an out; it can present a plan to regulators on how it would reduce its market share below 50 percent, which would in all likelihood mean breaking apart the company.

The overall goal of the legislation is to spur competition and open up the Mexican telecommunications market, said Manlio Fabio Beltrones, head of the lower house's ruling Institutional Revolutionary Party in a statement covered by Businessweek.

"With more investment we will have more competition, more quality and options of service and accessible prices for users," Beltrones said. "It's urgent that we approve this reform.

The law also gives teeth to the country's telecom regulator, the Federal Telecommunications Institute (IFT).

In addition to slamming Slim's telecom business, the legislation handcuffs what Slim can do in the emerging TV market, barring him from participating for the next 18 months until his company complies with the phone market antitrust measures. Again, though, there is a loophole: The IFT might let Slim compete for TV networks with a new, different company, according to The Wall Street Journal.

For more:
- see this Businessweek story
- see this Wall Street Journal story (reg. req.)

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