The government of Mexico has decided to reform its
telecommunications sector, predominantly the wireline and wireless
phone segments along with the cable and satellite TV segments.
In this regard, regulatory body Federal Telecommunications
Institute, which is popularly known as IFT, identified telecom
America Movil S.A.B.
) and broadcasting giant
Grupo Televisa S.A.B.
) as the dominant players in the respective markets.
America Movil's wireline division, Telmex, currently controls
around 80% of the Mexican market, whereas its wireless division,
Telcel, holds about a 70% market share. On the other hand, Televisa
currently dominates approximately 70% of the Mexican broadcasting
and pay-TV market. Notably, the IFT wants to restrict the maximum
hold of a company in a market to 50%.
As stringent measures, IFT will ban America Movil from charging
national roaming fees. Further, the company will have to share its
infrastructure with other operators particularly in the local loop
(last mileage) segment. Interconnection fees levied by America
Movil will also be closely monitored.
Similarly, Televisa will have to share its broadcast towers with
competitors for a stipulated amount of fees. Moreover, Televisa
will not be allowed to acquire exclusive broadcasting rights of
popular sports and entertainment events.
America Movil already filed an injunction against the
regulator's decision to identify itself as a dominant operator and
impose asymmetrical regulations on it. Televisa also stated that
the new telecommunications bill would impose disproportionate
obligations on the company such as, limitations on its advertising
sales, use of infrastructure and content distribution.
America Movil has decided to form a committee to strategically
assess various structural, commercial, technological opportunities
available to the company after the imposition of the new
However, the new regulations will allow America Movil to enter
the broadcasting market of Mexico, which has been controlled by
Televisa for a long time. In fact, America Movil had been eager to
enter this market with its existing telecom network earlier.
On the other hand, the new telecommunications industry reform
bill of the Mexican government may pave the way for Televisa to
capture a large chunk of the wireless market share.
In 2010, Televisa abandoned its wireless venture with Nextel de
Mexico, a subsidiary of
NII Holdings Inc.
) owing to prolonged legal disputes. Currently, the company holds a
50% stake in Grupo Iusacell, a small wireless operator of Mexico.
) is also negotiating with Televisa and Grupo Salinasto, the
remaining 50% stake holder of Iusacell, for the complete
acquisition of the company.
Want the latest recommendations from Zacks Investment Research?
Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report
TELEFONICA S.A. (TEF): Free Stock Analysis
GRUPO TELEVISA (TV): Free Stock Analysis Report
AMER MOVIL-ADR (AMX): Free Stock Analysis
NII HLDGS-CL B (NIHD): Free Stock Analysis
To read this article on Zacks.com click here.