Carlos Slim (Photo credit: Wikipedia)
Mexico's Congress on Tuesday overwhelming passed the final version of a far-reaching telecommunication reform bill designed to boost competition in Mexico’s phone and television industry, which is now controlled by the world's richest man, Carlos Slim, and fellow billionaire Emilio Azcarraga Jean. The new law was approved almost unanimously, with 108 votes in favor and three against. It gives the Federal Institute of Telecommunications, a new regulatory autonomous body formed by seven regulators, the power to revoke operating licenses for monopolistic practices and to stop companies from controlling more than 50% of market share.
Slim’s America Movil (NYSE: AMX) controls 80% of Mexico’s landline phone market and 70 % of the wireless market, while billionaire Azcarraga Jean’s Televisa (SAB) captures close to 70% of Mexico’s television audience. Forced assets sales, however, will not be automatic if companies are declared dominant by the competition regulator. Companies that are fined or told to sell off assets by the new federal competition commission will have the right to lodge appeals to suspend these decisions, a tactic companies have used to fight competition rulings in the past.
The new legislation “could materially affect the business of America Movil, ” the company said in a U.S. regulatory filing on April 30th, according to Reuters. On a call with analysts earlier in April, America Movil’s executives said the company would not make any strategic changes until it knows the details of the secondary laws to follow, added the news agency. America Movil expects the reforms to take effect sometime in 2014, since it needs to be approved by legislatures in the majority of Mexico's 31 states. The Mexican Congress also needs to draw up secondary legislation to implement the new rules. Some analysts believe that uncertainty over the bill has been a drag on the share prices of America Movil and Televisa.
The new law will also allow foreign participation in television companies to increase from 49% to 100 %; in radio, foreign stakes will be allowed to increase from 0% to 49%. President Barack Obama, who is scheduled to meet with his Mexican counterpart Enrique Peña Nieto when he travels to Mexico May 2-3, expressed U.S. interest in Peña Nieto’s “ambitious” wider economic reform agenda, which also includes a new bill to open up the now nationally-controlled oil sector to private investment as early as this fall.
Slim systematically rejects charges that he owns a telephone monopoly. During a recent discussion with Larry King at the Milken Conference in Beverly Hills, Slim defended himself from charges that his businesses are monopolies. "'Mono' means one," Slim said, before listing a litany of telecommunications, TV and other companies that compete with him in 18 different countries, most prominently in the United States. According to news reports, King said he was "fascinated" by Slim's wealth, but Slim said he doesn't keep track of how much he is worth day-to-day and never thinks about whether he has more or less money than
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