Tuesday, April 30, 2013

Mexico Telecom Deregulation is Coming

Mexico's telecom and TV markets are about to be disrupted, as the Mexican Senate has passed a bill to create a new communications and media regulator with the power to break up any firms with 50 percent or more market share in either the communications or TV broadcasting markets.

The legislation also ends the current limits on foreign investment in fixed network telephony and television. The law also creates a state-owned wholesale telecom network that would allow rival companies to bypass America Movil, which controls 75 percent of the country's fixed telephone lines and 70 percent of its mobile telephones and broadband accounts.


Televisa is the other target the new regulator will be looking at. Televisa, has around a 70 percent share of the TV market,


The new regulatory body, called the Federal Telecommunications Institute, is expected to be in operation by the end of 2013, with its first actions occurring in the first half of 2014.

Just how much impact the new law will have in promoting competition is not immediately clear, though it is anticipated the new regulator will impose asymmetric rules on contestants that will favor all the smaller competitors and handicap America Movil and Televisa in  some way.

The ending of the 49 percent investment cap on foreign firms might, or might not, have too much impact. Telefonica is a possible buyer of some of the smaller providers, as it already has about 22 percent mobile market share.

But international investors have been able to own more than 49 percent of mobile operations in Mexico for some time, and few have shown any appetite to buy into the market on a wider scale.

Possibly two new TV networks are expected to launch as a result of the changes. But there seems more uncertainty about market entry in the telecom business.

Observers might expect one of those new networks to be launched by Carlos Slim, who controls America Movil. Basically, Slim probably will use the new regulatory framework to diversify into television, even if America Movil








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