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America Movil selling up to appease Mexican regulator

America Movil is selling off some of its Mexican assets in order to reduce its market share to less than 50%.

The sale will be seen as a victory for the Mexican government’s recent proposals aimed at fostering a more competitive telecom sector.

Mexico’s lower house of Congress is currently discussing whether to endow the new regulator IFT with the power to break up any overly dominant market players. IFT had previously deemed America Movil to be a “preponderant economic agent”, suggesting that Carlos Slim’s firm could have been forced to sell assets had it not done so by choice.

America Movil’s share of the Mexican market via its subsidiary Telcel is around 70%. It also controls around 80% of the fixed-line market via Telmex. The group has not stated exactly which units it plans to sell, but has stated that potential buyers must have “sound economic and technical resources” as well as experience of the telecoms sector.

In presenting the rationale behind the sales, American Movil took an apparent jab at both its rivals and the government, saying that the IFT’s power to force the sale of assets was evidently necessary “to overcome the obstacle of the insufficient investment made by our Mexican competitors”.

America Movil also stated that it would form a new company separate from Telcel to manage the mobile operator’s passive infrastructure, including towers and cell sites. The new firm would be able to work with rivals as well as with Telcel.

 

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