America Movil’s largest shareholder Carlos Slim has dismissed the potential impact of telecoms reforms on the Mexican incumbent.
This week president Enrique Pena Nieto signed a bill into law which is designed to curb AMX’s dominance over the…
America Movil’s largest shareholder Carlos Slim has dismissed the potential impact of telecoms reforms on the Mexican incumbent.
This week president Enrique Pena Nieto signed a bill into law which is designed to curb AMX’s dominance over the wireless and fixed markets, where it has 70% and 80% market share respectively.
The bill creates a beefed-up regulator, the Federal Institute of Telecommunications (FIT), which will be able to revoke licences and demand asset sales if telcos do not comply with pro-competition measures.
Since the start of the year AMX’s share price has dropped by almost 15% and the company has previously issued a warning that reforms could have a “material impact” on its business in the country.
But in an interview with CNBC yesterday (11 June), Slim said he was not worried about the regulations. When asked about the possibility of forced asset sales he said he was sure that, if that did come to pass, AMX would receive “a good price”.
He added that it was important to the operator that rules were clearly defined and that he did not think profitability would be a problem going forward.
Slim said AMX was “happy” about price caps because prices need to come down, adding that they would fall due to better technology and in increase in the volume of use.
He defended the operator’s current position in the market, which has been widely denounced as monopolistic. Slim, who has a fortune of US$70bn, argued that it was natural for one company to be bigger than others and said that consumers have alternative operators they can switch to.
Pay-TV is a sector where there is less choice and that’s why it should be opened up to everyone, also part of the government’s reforms, he argued.
AMX has been trying to get into television for years in a bid to expand its offering and the reforms would give it that opportunity. It has already acquired the rights to broadcast the 2014 winter Olympics and the 2016 summer Olympics in all of Latin America apart from Brazil.
The company recorded revenues of US$21.2bn for 2012 for its Mexican business, just over a third of its total revenues.
The bipartisan reforms were presented in March and have now been approved by Mexico’s congress, state senators and president. Congress now has six months to amend other laws so the bill can be implemented.
