Telmex loses 'preponderant agent' appeal

Monday, August 29, 2016

Telmex announced that it has lost an appeal process begun in 2014 against the Mexican regulator's ruling labeling the América Móvil unit a 'preponderant economic agent' in the local telecom sector.

Telmex said in a statement filed with the Mexican stock exchange that once the court informs its ruling, the telco will "analyze its reach, grounds, and legal basis" in order to take action.

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Two years ago telecom regulator IFT determined that América Móvil and broadcasting giant Televisa were preponderant economic agents by controlling over 50% of their markets. The regulator imposed asymmetric measures to level the playing field.

The asymmetric measures included doing away with national roaming fees, sharing infrastructure with other operators, and ensuring number portability in a 24-hour timeframe.

Overall, América Móvil and Televisa filed 33 injunctions against the IFT when the market dominance measures were put in place, with several courts refusing to hear the appeals.

At the end of 2015, Telmex continued to dominate the fixed-line telephone segment, reporting a 66.7% market share.

Gonzalo Rojón, director of analysis at the Competitive Intelligence Unit, told BNamericas that the judicial setback suffered by Telmex will have no effect on the market. In his view, the regulator has contributed to América Móvil's market dominance by implementing measures such as granting it more spectrum or reducing interconnection tariffs.

"Actions such as these have gone against the reform. They do not balance the market or give users any incentives to look for other telecom service providers," Rojón said.

In other news, to shed its status as a preponderant economic agent, Rojón said Telmex could be divided into smaller, regional companies, much as the United States did with the Bell Telephone Company. Otherwise, expect Telmex's market share to only drop 5% over the next decade, he added.​

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