Photographer: Susana Gonzalez/Bloomberg

Slim's America Movil, Televisa Seen Needing Tighter Rules

Updated on
  • TV market concentrated, infrastructure must be shared: Report
  • Government should consider letting Slim enter TV market: OECD

America Movil SAB and Grupo Televisa SAB should face more regulatory restrictions to help Mexico’s telecommunications market continue to blossom, according to the Organization for Economic Co-Operation & Development.

A 2013 overhaul of telecom laws has successfully encouraged new players to enter the market, substantially reduced prices and improved access and service, the OECD said in a report Thursday. Yet the TV market remains concentrated in the hands of Televisa, and America Movil hasn’t done enough to share its phone-network infrastructure with competitors, the report said.

A further crackdown could inflict more pain on Mexico City-based America Movil and Televisa, which have already suffered under the 2013 reform. America Movil’s profit margin in Mexico dwindled to 20.3 percent last quarter from 34 percent in 2014. Shares of Televisa, controlled by magnate Emilio Azcarraga, began a decline of more than three months in late February after regulators declared the company dominant in the pay-TV market.

“Televisa is in compliance with all the measures that have been imposed on the company,” spokesman Alejandro Olmos said in an email. “The competitive environment will need to be analyzed as time goes by.” America Movil declined to comment.

Momentum Needed

The OECD, whose highly critical 2012 report on Mexico’s telecommunications market was influential in the creation of the 2013 law, said the government needs to keep at it. The new Telecommunication and Broadcasting Review of Mexico includes several recommendations “to maintain the momentum and move further towards” achieving the reform’s objectives.

“As the previous report did, I’m sure these recommendations will guide the actions to come,” Gabriel Contreras, president of Mexican telecommunications regulator IFT, said at an event Thursday. “This is a great opportunity. We should take advantage of it.”

Regulators should consider separating Televisa’s production and distribution businesses if progress remains slow, and America Movil should be required to share more information about the location of its network infrastructure to aid competitors, the OECD said.

America Movil, controlled by billionaire Carlos Slim, should also be allowed to compete against Televisa in the pay-TV market, if the telecommunications giant complies with an order to put parts of its network under independent management, according to the report.

The report also recommends that regulator IFT keep reducing interconnection rates in the mobile-phone market, saying the fee cuts have helped reduce prices for consumers.

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