July 9 (Bloomberg) -- Mexican lawmakers approved a bill to create more competition in telecommunications, paving the way for regulatory changes that are forcing billionaire Carlos Slim’s America Movil SAB to break up its dominant phone business in the country.
Mexico’s lower house voted 318 to 107, with no abstentions, in favor of the bill, which was passed by the Senate over the weekend after more than six months of delays and legal challenges. The law will need the endorsement of President Enrique Pena Nieto, who has spearheaded the push for the sweeping legislation.
America Movil is already bowing to the pressure of the imminent legislation by announcing last night that it will divest some assets to a newly formed independent company, reducing its market share in Mexican landlines and mobile phones to below 50 percent to appease regulators.
Supporters have said the new rules will help spark competitors to take on America Movil along with billionaire Emilio Azcarraga’s Grupo Televisa SAB, which has dominated the broadcast industry for decades.
In addition to restrictions on prices and requirements to share infrastructure, the law also lets such dominant companies propose their own breakups to reduce their market share.
Slim’s carrier, which is the largest operator in the Americas with 272 million wireless subscribers, will also separate its wireless towers from the rest of the business and will renounce its rights to acquire control of satellite-TV provider Dish Mexico. The carrier currently has 70 percent of Mexico’s mobile-phone subscribers and about 80 percent of landlines.
America Movil has lost almost $17 billion in market value since Pena Nieto became president in 2012 after a campaign built on the promise of sparking competition to aid Mexico’s economy. The company is now valued at about $73 billion.
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