A Mexican federal judge has agreed to review America Movil’s legal challenge against the regulator’s demand for the operator to spin off its fixed-line unit.
Earlier this year, the Federal Telecommunications Institute (IFT) asked the market leading operator to split its fixed-line business Telnor from its mobile business Telmex. The request resulted from a review of the impact of telecoms reforms imposed in Mexico in 2014, which were largely aimed at reducing America Movil’s dominance of the market.
IFT noted at the time that the new fixed-line units would be obliged to offer local network services, and would require a separate board of directors to America Movil. The new units are also prohibited from using any current or previous brands associated with the operator, including Telmex, Telnor and Telcel.
Upon receiving the request, America Movil vowed to appeal against the decision, with the filing being made last week. The operator is arguing that its proposed price structure for offering new services was ignored, and claims that the regulated prices for the services that its new units will offer “are substantially lower with respect to international benchmarks”.
The split is already underway and will continue while the appeal is reviewed under the order of federal judge Silvia Ceron in order to adhere to the two-year deadline imposed by IFT. This month will see Telmex submitting constitutional by-laws for the new units.
America Movil’s appeal against the split will be heard at a constitutional hearing on 16th May. It is unlikely to be resolved swiftly; an investigation could take up to a year, and the case could even be heard by the Supreme Court.