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America Movil Running Low on Options for Mexico TV Permit

Billionaire Carlos Slim’s legal setback last week in pursuing a long-sought license for America Movil SAB (AMXL)’s Telmex unit to offer pay-TV service in Mexico may leave him with few options left, a government lawyer said.

An appeals court ruled on July 5 that the Communications and Transportation Ministry had the authority to reject Telmex’s petition for a license. As a result of that ruling, the Supreme Court may decide against reviewing a separate case over whether the ministry erred in denying the license, said Gerardo Sanchez Henkel, the ministry’s legal director.

“Even if the Supreme Court did take up the case, we’d go to the court and show that we’ve complied perfectly with the law,” Sanchez Henkel said in a phone interview on July 6. The Supreme Court will probably decide by early August whether to review the case, he said.

America Movil, based in Mexico City, is seeking to add video service to its Internet-and-phone packages to compete with cable carriers controlled by Grupo Televisa SAB. Slim’s company had 14.6 million phone land-lines at the end of March, down 6.3 percent from a year earlier, as more users in the country shift to mobile devices.

Telmex, which had operating income of 26.6 billion pesos last year, has been asking for a TV license since 2006.

The ministry isn’t aware of any other legal proceeding related to Telmex’s pursuit of a TV license, Sanchez Henkel said.

Supreme Court

The Supreme Court has no deadline for its decision on whether to take the Telmex case and the process could take months, a spokeswoman, who asked not to be named under the agency’s policy, said by telephone.

Aside from the Supreme Court reviewing the case, Telmex can reapply for a TV license, though it will have to meet the same conditions that the ministry set for its previous application, Sanchez Henkel said.

That includes signing a government-proposed accord regulating how phone carriers connect their networks to each other, known as the Interconnection Framework Agreement.

The agreement is currently under review by Mexico’s Regulatory Improvement Commission. Telmex filed comments on the commission’s website last week criticizing the agreement, saying it doesn’t account for about 1.2 billion pesos ($89 million) in costs Telmex would incur to fulfill its obligations.

A Telmex official who asked not to be named under company policy declined to comment.

Telmex’s formal name is Telefonos de Mexico SAB.

To contact the reporter on this story: Crayton Harrison in Mexico City at tharrison5@bloomberg.net

To contact the editor responsible for this story: Nick Turner at nturner7@bloomberg.net

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