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Telecoms reforms would curb power of Slim and Televisa

March 12, 2013

With the aim of fostering greater competition in the telecommunications sector, the Mexican government unveiled reforms on Monday that would weaken the influence of billionaire Carlos Slim and television giant Televisa.

The proposed constitutional reforms would allow increased foreign ownership of media and phone companies, as well as establishing a new, autonomous Federal Telecommunications Institute (IFT) and even threatening the powerful monopolies that undermine the Mexican economy with forced asset sales.

“The purpose of these measures is to free up the sector’s potential, and do it as quickly as possible,” President Enrique Peña Nieto said upon presenting the proposals on Monday. “This is one of our biggest initiatives to democratize productivity and create a more dynamic economy.”

Mexico has long suffered from concentrated media ownership and weak regulations, resulting in high prices, low infrastructure investment, a lack of choice for consumers and an under-performing economy.

Previous governments have failed to curb the influence of the telecoms and media tycoons, but the Peña Nieto administration is well placed to bring about change, having negotiated the reforms with leaders of the two opposition parties through the “Pact for Mexico” agreed in December.

The bill could yet face alterations in Congress, where the Peña Nieto’s Institutional Revolutionary Party (PRI) lacks a majority, but it should meet approval by the end of April and could be signed into law by September, under the time-frame agreed upon in the tripartisan pact.

The measures proposed in the bill include auctioning the rights to two new television channels (with the two most powerful broadcasters, Televisa and TV Azteca, prohibited from bidding), creating a new public broadcasting channel, allowing foreign investors to own up to 49 percent of television or radio broadcasters (pending a review by a foreign investment commission) and introducing specialized courts for settling competition disputes.

The bill also stipulates that companies with a market share of over 50 percent will be deemed dominant and could be subject to sanctions, including possible forced sale of assets.

This could affect Carlos Slim’s Telcel, which controls 70 percent of the Mexican cellphone market, and Telmex, which controls 75 percent of the landline market. Despite the threat of being broken up, America Movil, Slim’s conglomerate which includes both Telcel and Telmex, issued a statement on Monday praising the bill for allowing the foreign investment that the sector needs.

Televisa and TV Azteca, which together control 94 percent of Mexico’s commercial networks, also stand to be affected by the reforms. Many Mexicans criticized and protested against Televisa’s coverage of last year’s presidential election, arguing that it was heavily biased in favor of Peña Nieto and the PRI, so limiting the network’s influence will effectively free the president from being tainted by such accusations.

Televisa’s billionaire owner Emilio Azcarraga welcomed the increased competition that the reforms would bring, writing on Twitter that it is “a time of great challenges, and also opportunities.”

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