UPDATE 2-Telmex seen closer to entering Mexican TV market

* Slim’s telephone giant Telmex wants to tap TV market

* Approval has been held up by competition concerns
(Adds de Swaan’s comments, other details, byline)

By Cyntia Barrera Diaz

MEXICO CITY, Aug 17 (BestGrowthStock) – Mexican billionaire Carlos
Slim may be getting closer to finally obtaining approval to
plunge into Mexico’s lucrative television market, seen as key
to survival of his telephone giant Telmex.

“It is possible and desirable,” Mony de Swaan, head of
Mexico’s telecom regulator Cofetel, told Reuters on Tuesday
when asked whether Telmex might enter the Mexican television
market in 2010.

“At a government level, we cannot continue talking about
(telecom services’) convergence while we impose artificial
barriers” to players,” he said.

Telmex (TMX.N: )(TELMEXL.MX: ), which controls 80 percent of
Mexico’s fixed phone lines, has long sought government approval
to add television services to the phone and Internet services
it offers its customers.

Such a move would help Telmex tap the market led by
broadcast and cable affiliates of Grupo Televisa, the world’s
leading producer of Spanish-language TV content.

But Telmex has been held back by government and rivals’
complaints, which it denies, that the company has failed to cut
the rates it charges to other phone operators for using its
massive transmission network.

Television is seen as vital to Telmex’s survival as the
company loses business to smaller competitors that offer
cheaply bundled Internet, television and phone service.

The company is scrambling to quickly build its Internet
business to make up for a decline in its fixed-line and
long-distance telephone revenues as clients switch to
cellphones and phone services offered by cable television

Mexico’s government has pointed to competition concerns as
part of the reason it has denied Telmex the go-ahead to offer
television services.

“We have said that Telmex has to meet certain conditions to
tap the video market,” Eduardo Perez Motta, head of Mexico’s
competition agency, told Reuters last week.

“We are saying that it has to be evaluated, and if (Telmex)
has not fulfilled (requests), we invite it to do so shortly so
that it can tap the market,” he added.

Cofetel has the power to recommend that Telmex be granted
approval to offer television service. That recommendation would
require final approval from the Communications Ministry.

In July, Telmex’s chief financial officer voiced
frustration over the company’s inability to say how soon it
might be able to enter the television market.

De Swaan said his agency would likely take steps to improve
competition in Mexico’s telecommunications industry, an
important sector in a nation where economic activity is
concentrated in the hands of a few massive companies.

One option de Swaan mentioned would entail auctioning off
new slices of the country’s mobile phone spectrum and unused
fiber optic strands that would strengthen Mexico’s
communications backbone.

On Monday, Cofetel approved a controversial bid from
Televisa (TV.N: ) (TLVACPO.MX: ) and partner Nextel, a unit of NII
Holdings (NIHD.O: ), to enter the mobile phone market, ratcheting
up competition for Slim’s America Movil (AMX.N: )(AMXL.MX: ), Latin
America’s leading cell phone firm.

The regulator said that the bid of Televisa and Nextel was
valid despite objections from some critics who said the process
allowed the companies to present a low-ball bid for wireless
(Additional reporting by Tomas Sarmiento; editing by Missy
Ryan, Matthew Lewis, Gary Hill)

UPDATE 2-Telmex seen closer to entering Mexican TV market