By Dave Graham
MEXICO CITY (Reuters) – Mexico’s new telecoms reform should be able to reduce tycoon Carlos Slim’s share of the local mobile phone market to less than 50 percent in the next five years, an influential opposition lawmaker said on Wednesday.
Slim, who controls around 80 percent of Mexico’s fixed line business and about 70 percent of the mobile sector, could be forced to divest assets according to a constitutional reform passed earlier this year.
The law, broadly backed across the political spectrum in Mexico, targets Slim’s giant phone company America Movil (MEX:AMXL) and rival Emilio Azcarraga’s broadcaster Televisa (MEX:TLEVISACPO), powerful symbols of the power wielded by a select group of families over Latin America’s second biggest economy.
The government is now drawing up secondary legislation to implement that reform, and Javier Lozano, head of the Senate’s transport and communications committee, said Mexico would have all the tools needed to radically change the market.
Congress is due to begin debating the secondary laws in coming weeks and some analysts are concerned lobbying by Slim and his fellow moguls could blunt the impact of the reform.
However, Lozano, one of the most influential telecoms experts in Congress and highly critical of parts of the original bill, did not believe the reform would come undone.
The reform created a new telecoms regulator known as Ifetel, which will be able to force Slim to share infrastructure with rivals, and, if necessary, break up his local operations to spur competition.
“With these instruments at hand, there have to be very visible changes in the medium term,” Lozano, a member of the conservative National Action Party (PAN), said in an interview.
Asked whether the measures would be sufficient to cut Slim’s market share below 50 percent before President Enrique Pena Nieto leaves office in 2018, Lozano said: “I would expect so. Above all, in terms of mobile services.”
Lozano, a former head of the previous telecoms watchdog Cofetel, said that if Mexico did not reduce Slim’s market share below 50 percent by then, the reform “would be a failure.”
Many analysts have been sceptical whether the 73-year-old’s hold on the market can be cut significantly, saying Slim’s competitors must first be prepared to invest large sums.
Some of those competitors argue, however, that they should not risk their money until his operations are broken up because of the power the billionaire already has in Mexico.
Ifetel must formally declare America Movil dominant before it can start to apply tougher regulation, a step due to take place by early next year at the latest.
Only time will tell whether Ifetel will go as far as to order a break-up of Slim’s Mexican operations, fixed line company Telmex and the mobile firm Telcel, and Lozano said he would advocate that only as “the last resort.”
“We can’t get into the realm of confiscating Telmex assets. That would be very dangerous for the country,” he said.
For years, Slim successfully fought off efforts to weaken his hold on the telecoms market with legal injunctions and appeals, a strategy also pursued by Azcarraga.
The government’s reform seeks to end the stalling, and Lozano said the telecoms law would strip away about 80 percent of the legal cover the firms have used to thwart regulators.
Lozano was also optimistic that Ifetel, whose seven initial members were confirmed by the Senate last month, would act independently and not give in to pressure from the media and telecoms magnates.
“They’re not linked to any of the companies,” he said.
(Editing by Edwina Gibbs)