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America Movil’s shares fall as Mexican regulator prepares new legislation to end its dominance

The prolific Latin American operator America Movil’s shares hit their lowest point for a year last week, apparently in reaction to comments from Mexico’s regulators suggesting that legislation aimed at increasing the operator’s competition could be implemented this month.

America Movil has dominated the Mexican market to the point that the country’s regulator, the Federal Telecommunications Commission, is applying limitations on the extent to which the operator’s fixed-line unit can lease lines to other market players.

The FTC’s president Mony de Swaan has stated that these restrictions will be imposed this month, and confirmed that the operator’s mobile branch will also be placed under similar constraints, saying: “They’re decisions that can greatly impact the market, so we want to tread carefully. It will be a mix of different measures having to do with fees, information and quality.”

The new regulatory framework was drafted following an investigation by a Mexican antitrust agency which recommended directly challenging America Movil’s market domination with revised legislation. America Movil is disputing the investigation’s findings. Its shares reportedly fell by MXN1.2 down to MXN28.73 (US$2.5), their biggest drop in a year.

The Latin American giant holds around 70% of the mobile market in Mexico, while its fixed-line operations has around 80% of the market share in this field, as well as controlling roughly 70% of internet connections.

Interconnection rates are therefore likely to be lowered further by the new legislation; the FTC halved the rate earlier this year in a move that was likely influenced by the belief that the main beneficiary of interconnection fees is the dominant market player.

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