America Movil has been hit with orders from the Mexican regulator IFT to spin off part of its fixed line infrastructure and restructure some of its mobile operations.
The operator stated that the IFT had demanded a “functional separation” of its fixed-line operations, which will necessitate the creation of a separate unit to its Telmex subsidiary. This new unit would “exclusively provide wholesale services”, leasing out its infrastructure to rival operators. With regard to its mobile offering, IFT warned America Movil that it must cooperate with MVNOs looking to start up in Mexico.
The IFT’s demands will provide America Movil with a stark reminder of Mexico’s 2014 telecom reforms, which were largely aimed at reducing the operator’s overwhelming market dominance in order to foster greater competition. America Movil has stated that it will fight back against the orders, adding that increasing numbers of mobile users are already stimulating competition and making “asymmetric regulations” unnecessary.
The operator’s statement reads: “America Movil believes that IFT resolution is not based on an integral evaluation in terms of competition, nor does it consider the profound changes in the Mexican telecoms sector within three years from the imposition of the asymmetric regulations and the effective competition that exists in mobile and fixed services, which is clearly shown, among others, by the significant growth in the consumption of telecommunication services, mainly data.”
While competition has indeed increased with the entry of US-based AT&T to the Mexican market following the first set of reforms, America Movil’s market share is still above 65% in both fixed and mobile.