Threat to Slim from Mexican regulators

Click to follow
The Independent Online

Carlos Slim, the world's richest man, is fighting to shore up his dominance of the Mexican telecoms market, which made him a billionaire, as the country's regulators and courts turn against him.

The Mexican Supreme Court ruled that Mr Slim's America Movil, which trades as Telcel in Mexico, cannot continue to defy the country's telecoms regulator, and must cut the prices it charges rival companies when calls connect to the Telcel network.

The Federal Telecommunications Commission, Cofetel, fined America Movil $1bn (£604m) last month and told it to cut interconnection fees.

Consumers and businesses blame Telcel and its fixed-line telecoms sister company Telmex for Mexico having some of the highest telephone bills in the industrialised world, and Cofetel concluded after a four-year investigation that the America Movil companies do indeed abuse a dominant position in the market.

The cigar-puffing Mr Slim inherited a property fortune from his father, an immigrant from Lebanon who first went into business running a general store in Mexico City, but he parlayed that into one of the world's largest business empires by snapping up industrial companies at a fraction of their book value when investors fled Mexico after its 1982 financial crisis. His political associations then helped him win control of the privatised monopoly Telefonos de Mexico (Telmex) in 1990.

The mobile phone business that grew out of Telmex is now the largest in Latin America, operating in many countries under the Claro brand; 231 million people subscribe to its services.

Today, Forbes magazine estimates Mr Slim's worth at $74bn, $18bn more than Bill Gates of Microsoft.

Rival mobile phone companies in Mexico, including Grupo Televisa and Alestra, have complained that Telcel charges them too much in interconnection fees, and Cofetel has ruled in their favour, saying Mr Slim's company must slash the fees from 95 centavos (36p) per minute to 39 centavos.

America Movil sought a court injunction allowing it to continue charging 95 centavos while it pursues legal appeals against Cofetel, but the Supreme Court shot down that injunction on Tuesday. "It is not acceptable to suspend the interconnection tariffs that the Federal Telecommunications Commission fixes," the court said.

America Movil is controlled by the Slim family through a majority shareholding. It denies anti-competitive practices. It says it will abide by the Supreme Court's decision but continue its legal fight, including challenging the way Cofetel calculated interconnection fees and appealing against the $1bn fine.

Earlier this week, the company reported net income of 23.5bn pesos (£1.2bn) for the first three months of this year, up from 21bn pesos a year ago on revenues of 156bn pesos.

Comments