America Movil’s proposal to split its fixed business into a separate unit has been rejected by Mexico’s regulator.
The Instituto Federal de Telecomunicaciones (IFT) ordered the market leading operator to spin off its fixed unit Telmex and set up a separate wholesale business as part of a drive to foster competition in the telecoms sector. America Movil is the leading provider of both fixed and mobile services in Mexico, with its market share in each sector topping 60%.
Having deemed America Movil’s initial proposal unsatisfactory, the regulator has given the operator thirty days to amend its plan so that it can “ensure the effectiveness of the functional separation and the fulfilment of the objectives foreseen in the constitutional reform in telecommunications.”
The regulator argued that ordering the break-up of America Movil into separate units would “eliminate barriers identified in the telecommunications sector through the effective provision of wholesale services, in order to guarantee the access of all operators, under non-discriminatory conditions, to the necessary inputs for the development of the healthy competition and free competition.”
The IFT has been pushing America Movil to shake up its business since 2014, when Mexico began addressing the issue of the operator’s overwhelming market dominance. The notion of spinning off America Movil’s fixed unit was raised by the regulator earlier this year, along with suggesting that the operator should update its wireless wholesale policies to facilitate the operating environment for MVNOs.
While America Movil stated in March this year that it would refuse to comply with the regulator’s orders, it seems to have backpedalled on this rhetoric, submitting the proposal to split from its fixed business.