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Slim’s Telmex Targeted in Rules Regulating Lease of Lines

March 22 (Bloomberg) -- Mexico’s telecommunications regulatory agency approved rules implementing price and quality controls for dedicated lines leased by billionaire Carlos Slim’s Telefonos de Mexico SAB to competitors.

The rules will go into effect in “the coming days” when they are released in the official gazette, the agency known as Cofetel said yesterday in an e-mailed statement.

Carriers designated as dominant by Mexico’s antitrust agency will face regulations to prevent them from “engaging in conduct that hurts the development of equal competition, or hurt consumers through the fixing of arbitrarily high prices in services offered,” Cofetel said.

Telmex, as the Mexico City-based unit of America Movil SAB is known, dominates the market for originating, carrying and completing phone calls as well as leasing lines to rivals, the antitrust agency found in 2009. The agency declared America Movil’s wireless unit Telcel dominant in the mobile-phone market the following year.

Telmex is the only company to be designated as dominant by the antitrust agency in the market for dedicated lines.

The rules tighten the government’s oversight of the phone carrier controlled by Slim. More rules are coming in other areas in which the antitrust agency has declared Slim’s companies dominant, Cofetel President Mony de Swaan said in a January interview.

America Movil and Telmex are appealing the antitrust agency’s rulings on their dominance. The companies have 70 percent of wireless customers and almost 80 percent of fixed lines.

Service Requests

Telmex had no immediate comment, said an official who asked not to be named because of company policy.

The rules obligate any carrier designated as dominant to provide competitors using leased lines with quality “that in no case can be inferior to that which the carrier provides itself or to its subsidiaries or affiliates.” Service requests must be attended to “with punctuality,” Cofetel said.

The agency did not specify what prices dominant carriers can charge for the lease of dedicated lines.

Cofetel is also recommending the Communications and Transportation Ministry level sanctions against America Movil’s local wireless unit because it failed to disclose information about network traffic during service outages, the agency said.

America Movil, which owns about 95 percent of Telmex, slipped 0.1 percent to 15.30 pesos at the close in Mexico City. Telmex rose 1.6 percent to 10.29 pesos.

To contact the reporter on this story: Jonathan Roeder in Mexico City at jroeder@bloomberg.net

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

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