Mexico regulator eyes Slim’s wireless profits

* Regulator eyes Slim’s cellphone profits

* Regulatory battle has yet to make big score

By Noel Randewich

MEXICO CITY, Feb 2 (BestGrowthStock) – Mexico’s competition
watchdog said on Tuesday that hefty profits at America Movil’s
local unit show that the operator, controlled by tycoon Carlos
Slim, enjoys a heavy-handed role in the wireless market.

The antitrust regulator ruled last month that America
Movil’s local unit, Telcel, dominates Mexico’s cellphone
industry, a decision that could expose the operator to new
regulations at a time when Slim wants to consolidate his
telecom empire.

“In a market with high barriers to entry, Telcel has four
times the clients and five times the revenues of its closest
competitor,” the regulator said in a statement.

“It has large and growing profit margins that are
inconsistent with a competitive market.”

America Movil has rejected the regulator’s assertion.

Mexico’s government for years has struggled to reduce the
dominance of Slim’s flagship America Movil (AMXL.MX: ) and his
fixed-line operator Telmex (TELMEXL.MX: ), making rulings and
implementing regulations that are often fought over in court.

Telcel has a little more than 70 percent of the Mexican
market, with Spain’s Telefonica (TEF.MC: ) a distant No. 2.

Slim’s Telmex, a former government monopoly, has about 80
percent market share in fixed-lines, but is losing business as
clients switch to cellphones and cable operators offering
telephone service.

Reacting to tougher competition in the region, Slim last
month unveiled a $21 billion plan to shift control of Telmex
and regional fixed-line operator Telmex Internacional
(TELINTL.MX: ) into America Movil.

Declaring his companies dominant in their markets opens the
door to the possibility of creating rules to reduce their
power. But previous rulings that Telmex and America Movil are
dominant have been fiercely contested and have yet to result in
regulations to curb them.

UP FOR APPROVAL

Competition commission head Eduardo Perez Motta told
Reuters in January that it could take up to three months to
approve or reject Slim’s plan once it is submitted.

Last week, America Movil objected to the most recent
dominance finding, the fifth against the operator in the past
five years.

The government is currently auctioning wireless frequencies
to try to attract at least one new operator to Mexico’s
cellphone industry.

Telefonica lacks spectrum in the key Mexico City area and
has waited years for the government to put more frequencies up
for auction for the rights to use them.

America Movil is expected later on Tuesday to post an
improved fourth-quarter operating profit, but fewer new clients
than in the year-ago quarter.

Stock Report

(Reporting by Noel Randewich, editing by Maureen Bavdek)

Mexico regulator eyes Slim’s wireless profits