Slim to break up América Móvil Mexico assets
09 July 2014 |
Carlos Slim’s América Móvil has revealed plans to reduce its market presence in Mexico to less than 50%.
Built up over the last quarter of a century, América Móvil owns an estimated 70% of Mexico’s mobile market and 80% of its fixed-line business, and the company expect the divestments to prevent it from being hit by tougher regulations.
The news has received resounding approval from Mexico’s communications authorities.
“The Transport and Communications Ministry declares that this decision could transform competition in the telecommunications sector with improved quality and better prices for services to end users,” it said in a statement.
No potential assets or buyers have been revealed, but the company said that a buyer would need to be “an option that can genuinely take part in this capital-intensive sector, to overcome the insufficient investment of our competitors”.
Although América Móvil has agreed to this proposal, it also said that any sale would be under the condition that its mobile and fixed-line businesses are no longer declared dominant players; which holds further potential for a clash with the Mexican government.
The plan is awaiting approval from Mexico’s telecoms regulator, IFT, and Mexican analyst Alexander Elbittar told local reporters that it was a “strategic way” for América Móvil to respond to being declared a predominant player.
América Móvil has long been under pressure to share its infrastructure with competitors like Telefónica, and the divestments could enable it to enter markets it has been eyeing for some time, such as pay-TV.
Slim added that he expected to be allowed to offer all telecoms services, including pay-TV, should he go ahead with the divestments.
Yesterday, the Mexican government defended its new telecoms bill which was accused of penalising Slim’s América Móvil.
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