Mexico regulator says America Movil can charge competitors for calls

FILE PHOTO -  The logo of America Movil is pictured on the wall of a reception area in the company's corporate offices in Mexico City
FILE PHOTO - The logo of America Movil is pictured on the wall of a reception area in the company's corporate offices in Mexico City, Mexico, May 18, 2017. REUTERS/Edgard Garrido/File Photo

November 3, 2017

By Anthony Esposito and Julia Love

MEXICO CITY (Reuters) – Mexico’s telecommunications regulator said on Thursday that billionaire Carlos Slim’s America Movil <AMXL.MX> could start charging local rivals for mobile calls to its network for the first time since a 2014 sector reform.

The move marked a victory for America Movil, Mexico’s dominant telecoms company, which has seen its earnings held back by a zero charge rate.

Reuters first reported the IFT regulator planned to vote on reinstating the charges.

The IFT said America Movil, Mexico’s dominant telecoms provider, would be able to charge rivals 0.028562 peso per minute for calls to its network as of Jan. 1. Competitors can charge 0.112799 peso per minute for mobile calls to their networks, it said.

The rates were below those of 0.03686 and 0.1176 pesos, respectively, proposed in a draft document by the IFT’s regulatory policy seen by Reuters.

The regulator said Thursday’s move represented “a regulatory policy mechanism that aims to balance competition; reduce the disadvantages derived from the size of the network, and allow smaller companies to have rate plans that put them in a competitive position.”

America Movil declined to comment.

Competitors had urged the regulator to keep the zero interconnection rate, or something close to it. Broadcaster Grupo Televisa, for example, recommended America Movil should be permitted to charge no more than 0.015 pesos per minute.

A spokesperson for rival AT&T Inc <T.N> said the IFT’s decision “helps the preponderant and harms consumers and competitors” as the zero tariff policy “brought more investment, more and better wireless services, and dramatically lower prices for millions of Mexican consumers.”

“We are disappointed because the new interconnection tariff is a step backwards on the path toward delivering on the objective of the reforms,” said the spokesperson.

AT&T and Telefonica SA <TEF.MC> have been awaiting new rates since the Supreme Court ruled in August that America Movil should not be barred by law from charging other carriers for calls to its customers.

The court found the market regulator, the Federal Institute of Telecommunications (IFT), not legislators, should set the so-called interconnection rates. That decision weakened a key pillar of a 2014 reform intended to loosen Slim’s grip on a market he has dominated since taking control of former state phone monopoly Telmex in the 1990s.

In line with the 2014 telecoms reform that was one of President Enrique Pena Nieto’s signature accomplishments, America Movil cannot charge other carriers for calls made to customers on its network, even though those firms can bill Slim’s firm for using theirs.

(Reporting by Anthony Esposito; Editing by Lisa Shumaker and Andrew Hay)