Mexico Telecom Bill Returns to Senate With Small Wording Change

Mexico’s lower house sent a bill to increase competition in telecommunications back to the Senate, paving the way for tougher regulators to challenge the dominance of America Movil SAB and Grupo Televisa SAB.

The proposal, also backed by President Enrique Pena Nieto, must be approved a second time by the Senate because of a small change in wording in the lower house version of the bill. Then it requires the signoff of a majority of legislatures in Mexico’s 31 states and capital. Under the bill, new government agencies would have the power to force companies that control more than 50 percent of the market to share or even sell assets.

Lawmakers aim to increase investment and reduce prices in the phone and pay-television industries and to create more choice in broadcast TV. The proposal would create tougher conditions for America Movil, which has 70 percent of Mexico’s mobile-phone subscribers, and Televisa, which gets 70 percent of the nation’s broadcast-television audience.

“Investment in the sector could double, fostering growth and productivity,” Marco Oviedo, chief Mexico economist at Barclays Plc, in an e-mail.

Lower house lawmakers approved the general portion of the bill today by 409 votes in favor, 32 against and 2 abstentions. The only change from the Senate’s version was a small tweak to the wording to limit the injunctions companies can file to block actions by the new antitrust agency, the Federal Economic Competition Commission.

The new law would allow foreigners to take majority stakes in landline phone and cable networks for the first time. It also calls for the creation of new TV broadcasters through government auctions.

America Movil, controlled by billionaire Carlos Slim, fell 0.9 percent to 12.84 pesos at the close in Mexico City, where it is based. Televisa rose 1.1 percent to 63.65 pesos.

Few Changes

Lawmakers have made few changes to the bill, originally drafted by leaders of Mexico’s three major political parties. The lower house of Congress previously added a measure to prevent a dominant company offering pay-TV service from benefiting from free access to broadcasters’ signals.

In its version, the Senate said companies regulated by the Federal Economic Competition Commission can request temporary injunctions against fines and forced asset sales. The lower house’s change today was designed to clear up potentially vague wording in that Senate bill to ensure companies couldn’t block a wider variety of antitrust rulings.

The changes on injunctions won’t apply to telecommunications and media companies, who will be fined and can be broken up by a separate agency, the Federal Telecommunications Institute, whose decisions can’t be suspended.

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