Cofetel wants Telmex to reduce phone service prices further

Cofetel, Mexico's telecom regulator, wants America Movil's (NYSE: AMX) subsidiary Telmex to cut the price consumers pay for basic wireline phone services.

Mony de Swaan, Cofetel's president, said if Telmex can't present an acceptable rate reduction, Cofetel itself will set the phone prices in April. The regulator's actions follow Cofetel rejected Telmex's initial four year rate phone service rate proposals.

Last week, Telmex and wireless operator Telcel reached an agreement with Telefonica's (NYSE: TEF) Mexico wireline/wireless unit Telefonica Moviles Mexico (Movistar) to cut interconnection rates between their respective fixed and mobile networks.

Out of that process, Telmex cut its fixed-to-mobile voice call charges by 10.6 percent to MXN 1.35 (USD 0.11) per minute, which was effective as of Jan. 1. In addition, Telmex said it would not burden its customers with the cost of a 1 percent rise in VAT and IEPS (special tax on production and services) and drop the tariff for its 'Infinitum' Internet service.

Although Telmex is now part of a more powerful wireline/wireless operator that emerged when Telmex and Carso Global Telecom was consolidated under the America Movil umbrella last year, the reality is that both units need to maintain competitive rates to deal with the ongoing growth of competitors like Movistar.

For more:
- TeleGeography has this article

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