Mexico: competition in the telecom sector

The Mexican Senate has approved a bill aimed at boosting competition in the country's telecom sector.

The legislation could compel a breakup of or impose penalties on companies such as Carlos Slim's America Movil and Emilio Azcarrága's Grupo Televisa.

At least in the case of America Movil, the new rules seem likely to motivate the company to expand its activities in other countries.

In March this year, Mexico's newly established telecoms authority, IFT, declared América Móvil and Televisa dominant based on market share.

América Móvil controls about 70 percent of the country's mobile phone market and 80 percent of its fixed-line business.

For its part, Televisa has more than 60 percent of the over-air television market, and is the biggest cable and satellite broadcaster.

If the companies break new rules, which limit market share in any segment to 50%, they could be fined up to 10 percent of annual sales - twice as much for repeat offenses.

América Móvil had 2013 revenue of $23 billion, while Televisa revenue was more than $5 billion.

The reform would eliminate long-distance charges within Mexico.

It also seeks to boost infrastructure investment in order to increase coverage and variety of telecoms services.

As the rules limit domestic business, Slim has been looking for ways to expand abroad.

Last month, América Móvil subsidiary Claro (only in Spanish) launched a new corporate service in Central America.

VPN Regional eliminates roaming charges for intercompany calls throughout the region, except for Panama.

In Europe, Austria's antitrust watchdog approved an agreement, whereby America Movil and the Austrian government will pool shareholdings in Telekom Austria.

The two parties will have a combined 55 percent stake in the company.

Slim has also expressed interest in expanding into Poland, Hungary and Turkey.