Slim Rebuts OECD’s Study Citing Overcharging in Mexico’s Telecom Industry

Carlos Slim, who controls Mexico’s dominant phone companies, said the prices they charged in the country are among the world’s lowest, in response to a report by the Organization for Economic Cooperation and Development.

The billionaire refuted the study released yesterday by the OECD, which said Mexican customers were overcharged by $13.4 billion a year from 2005 to 2009. The data used by the OECD “was pulled out of thin air” and lacked substance, Slim said during a press conference in Mexico City today.

Slim’s America Movil SAB (AMXL), the largest wireless carrier in the Americas, controls 70 percent of Mexico’s mobile market. The company also owns Telefonos de Mexico SAB, which has an 80 percent share of the nation’s fixed-line market. The phone industry’s excess fees combined with the potential loss of business caused by high prices equaled 1.8 percent of Mexico’s gross domestic product, according to the OECD.

“It’s difficult to compare a country with $1,000 per capita with countries with $40,000,” Slim said. “It’s not that the lower broadband impacts GDP growth, it’s that the lower rate of growth affects the broadband.”

Prices for high-speed Internet service in Mexico are the highest in the OECD, according to the organization’s report, which used a comparison method called “purchasing power parity” to adjust for economic differences between countries. America Movil Chief Financial Officer Carlos Garcia-Moreno said last year that the method is questionable for comparing specific prices.

Mexico “needs the socioeconomic boost provided by greater access to more efficient communication services, in particular high-speed broadband,” the OECD said.

‘Major Disadvantage’

Slim said a government ban that prevents Telmex, as the Mexico City-based fixed-line operator is known, from offering pay television services is “a major disadvantage.”

Grupo Televisa SAB (TLEVICPO) has captured market share from Telmex by offering “triple play” packages of phone, Internet and cable. Telmex (TELMEXL) can only offer Internet and phone and has said pay-TV would boost revenue.

America Movil shares fell 0.9 percent to 15.14 pesos at 3:22 p.m. in Mexico City trading today.

To contact the reporters on this story: Crayton Harrison in Mexico City at tharrison5@bloomberg.net; Carlos Manuel Rodriguez in Mexico City at carlosmr@bloomberg.net

To contact the editor responsible for this story: Jonathan Roeder at jroeder@bloomberg.net

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