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Mexico top court sides with regulator over America Movil ‘preponderant’ label

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(C) Reuters.

By Cassandra Garrison

MEXICO CITY (Reuters) – Mexico’s Supreme Court on Wednesday ruled in favor of the country’s telecoms regulator over a label that aims to curb the dominance of Carlos Slim’s telecommunications company America Movil (NYSE:AMX).

The ruling deals a blow to one of the country’s largest companies in its ongoing fight to peel back restrictions.

Mexico’s Federal Institute of Telecommunications (IFT) acted within the constitution when it determined in 2013 that the America Movil Economic Interest Group, made up of Telcel and other subsidiaries, is a “preponderant agent” in 2013, the court said in a statement.

That label opened the door for stricter regulations under a reform of the country’s telecommunications industry, aimed at breaking up the dominance of Slim’s telecoms empire.

The classification and measures imposed on the company by the IFT “validly limit its rights in benefit of the citizens to reduce the asymmetries in the coverage of the networks with respect to the different mobile operators”, the supreme court said in a statement.

A spokesman for America Movil said the company was aware of the resolution, but declined to comment. A spokeswoman for the IFT also declined to comment.

While the ruling does not change the status quo for America Movil, it is a setback for the giant’s ongoing battle to shake off the restrictions imposed by the reform, industry experts said.

“It’s a significant defeat for America Movil and Carlos Slim … all the restrictions stay in place,” said Roger Entner, an analyst at Recon Analytics.

It could also pave the way for the IFT to impose more restrictions aimed at trimming back its power and making it easier for rivals to enter the market.

“It might free up the IFT to be more forceful in insisting that America Movil act to reduce its market share below 50% by further sharing infrastructure or making other concessions to rivals,” said Andrew Paxton, a business historian at Mexico’s Economic Research and Teaching Center (CIDE).

Mexico top court sides with regulator over America Movil ‘preponderant’ label

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