The 2013 Telecommunications reform in Mexico opened the door for small telecommunications companies to compete against larger ones. And in size, income, and coverage, América Móvil is by far the largest in the country.
América Móvil is a Mexican multinational company with a presence throughout Latin America and the United States, owner of the main fixed telephony (Telmex) and mobile (Telcel) services in Mexico, as well as the main Internet provider (Infinitum). Mexican magnate Carlos Slim Helú is the main individual shareholder of the company.
Bad times for the greatest company
Since the 2013 telecommunications reform, América Móvil has lost ground significantly. Ten years ago the company owned 75% of the market in Mexico, becoming one of the largest monopolies in the country.
The telecommunications reform, which gave life to the Federal Telecommunications Institute, was carried out to balance the game. Telmex could no longer charge smaller operators for the use of its infrastructure.
Since then, Telmex’s dominance has declined across the country. The company now serves 48% of the market and, in some areas of Mexico, is no longer the main player. For this reason, the IFT has decided that the company can re-set rates for other operators, removing a burden from this company, which has already lost value in the stock market for more than five years.
Lending a hand to América Móvil
The IFT put to consultation the possibility that América Móvil can establish the rates in the markets where it has lost preponderance. To be considered this way, the company must have a market share of less than 50% in geographic areas where there is a fixed broadband penetration greater than 75 accesses per 100 households. Also, there must be a presence of more than three operators where at least two provide fiber optics and one has a market share of 20%.
These conditions are met in 63 municipalities in the country, which are the largest cities in the Mexican Republic.
The IFT’s decision has caused controversy. Hugo González de Contraréplica considered that the measure, instead of saving Jesus, opts for Barabbas. For his part, Gonzalo Rojon of The Competitive Intelligence Unit considers that the measure goes against the original meaning of the Federal Telecommunications and Broadcasting Law in what appears to be an agenda driven by the economic interests of individuals.