Mexican government shakes up telecoms and broadcast sectors

12 March 2013 | Kavit Majithia

The Mexican government has revealed a proposal expected to limit billionaire Carlos Slim's control of the telephone market.

The bill is also expected to include provisions intended to contain broadcaster Televisa's dominance of the airwaves.

Announced on Monday, the bill is designed to establish a powerful industry regulator with the ability to open up the market to new investors and relinquish power from former dominating companies.

“The purpose of these measures is to free up the sector's potential, and do it as quickly as possible,” said President Enrique Peña Nieto of the Institutional Revolutionary Party (PRI).

Nieto has vowed to triple the country’s annual average growth rate to 6%, and took office in December last year.

Under the proposal, the new regulator for telecoms and television, named the Federal Telecommunications Institute, will be able to classify any company deemed dominant, with over 50% of market share. These companies in question could then be subject to a host of sanctions, including asymmetric regulations on pricing to aid smaller companies.

Both America Movil and Televisa’s share price dropped following the news by 3% and 1% respectively.

Broadcaster Televisa has however supported the proposals. It said in a statement: “For several months, we have been saying that Mexico need to modernise its telecoms and broadcasting sectors.”

The company has made significant investments in the past on battling with Carlos Slim in the telecoms segment, and said it looks “forward to competing on a more level playing field”.

America Movil, too, supported the reform proposals and the limitations on foreign ownership. The company added it believed in a “new phase in the development of telecommunications and broadcasting in Mexico”.