Source: Ponsulak/Getty Images/iStockphoto

America Movil Looks for $800 Million Reprieve From Supreme Court

  • Slim’s company awaits rulings on injunctions against reform
  • Telefonica, AT&T could face back payments for calling fees

Mexico’s Supreme Court may rule as early this month on the constitutionality of key provisions of the 2013 telecommunications reform law that have hurt America Movil SAB and benefited its competitors.

America Movil, controlled by billionaire Carlos Slim, is waiting for the country’s top court to vote on its amparos, or injunctions, against the provisions. The company claims Congress didn’t have the authority in 2014 to create rules that singled out America Movil for tougher penalties. A vote by the court’s justices could come before a July 15 recess, though it’s possible the timing could slip till later in the year.

In one of the cases, a favorable ruling for America Movil could walk back one of the most important aspects of the telecom overhaul, which eliminated the interconnection fees that America Movil charged its competitors for incoming calls to its network. Telefonica SA and AT&T Inc. can still bill America Movil when its users call their customers.

The ruling could also make these so-far unpaid fees retroactive, meaning America Movil would be entitled to more than $800 million in backlogged payments from its rivals, according to Bloomberg estimates based on traffic between the carriers reported to regulators over the past 2 1/2 years.

A second case looks at whether Congress had the authority to require America Movil to publish a public reference price for telecommunications services.

America Movil declined to comment, as did Mexico’s telecommunications regulator, the IFT.

The asymmetric rules made the industry more attractive to investors, leveling the playing field for newcomers to take on America Movil, which controlled about 70 percent of the market. The reform has also been one of the most successful in President Enrique Pena Nieto’s administration, greatly lowering mobile costs for customers through increased competition. AT&T entered Mexico in 2014, acquiring Grupo Iusacell SA and Nextel Mexico, and has lured subscribers with aggressive promotions.

“The 2013 reforms made Mexico a very attractive place to invest and without them we would not have entered the market,” Fletcher Cook, a spokesman for Dallas-based AT&T, said in a statement. “Their lasting and effective application could trigger more investments for the benefit of consumers and businesses and a healthier environment for economic growth.”

Telefonica declined to comment.

— With assistance by Nacha Cattan

    Quotes from this Article
    Before it's here, it's on the Bloomberg Terminal.