This section features background information and resources relevant to the current research theme. It includes resources produced by WDR and external sources and is organised by regions and topics. An archive of resources recommended in previous research cycles is also available along with news from the WDR/Intelecon Regulatory News Service.
Mexico: New Cofetel Commissioners and Regulatory Reform Print E-mail
Wednesday, 10 September 2008

Telmex and America Movil, owned by Carlos Slim, are set to see increased competition and potentially tougher regulation.

Analysts say two new commissioners on the five-seat board of Cofetel, Mexico’s telecommunications regulator, could be a catalyst for change. Chosen by Communications Minister Luis Tellez, commissioners Rafael del Villar and Gonzalo Martinez are advocates of increased competition. They could also accelerate the allocation of additional spectrum to the competitors of Telmex, which controls over 90% of Mexico's 20 million fixed lines, and America Movil, which has around 70% market share in the mobile sector.

“The competition between Telefonica and Slim's companies is going to become very fierce," said Valmex analyst Andres Bezanilla. The Spanish company requires more spectrum to launch 3G services, which America Movil already offers.

BBVA-Bancomer analyst Rodrigo Ortega said one factor preventing a spectrum auction was the organizational changes at Cofetel. "We expect the call for bids to be ready before the end of this year," Ortega said. "This would be slightly negative for America Movil because it would mean more competition."

Telmex, bought by Slim in a 1990 privatization auction, is waiting to see the outcome of a government competition watchdog investigation into its dominance. A preliminary ruling said that Telmex wields "substantial power" in four markets. A final ruling could result in stricter regulations on Telmex.

However, analysts also expect Telmex will soon be licensed to offer television services. "This is going to come at the end of this year or at the start of the coming year at the very latest," said Martin Lara, analyst at Vector brokerage.

Communications Minister Tellez believes that Telmex should be allowed to offer television. Cable operators are opposed to the move and argue that Telmex's existing license bans it from entering the TV business. Analysts believe it is only a question of time before Telmex offers TV service. It will be considered a welcome development for the operator as its fixed line business is experiencing difficulties, having lost 540,000 lines in the last year.

Source: Reuters - WDR/Intelecon Regulatory News.