América Móvil hit with record $1B fine in Mexico

Written by  //  April 19, 2011  //  Telecommunications/Technology  //  No comments

Mexico’s Federal Competition Commission has slapped América Móvil with a $1 billion fine for monopolistic practices following a probe launched in that country in 2006. The watchdog agency determined the company, which commands 71 percent of Mexico’s mobile market through its Telcel subsidiary, is abusing its dominant position.

The record fine responds to Telcel’s control over the country’s largest mobile network, for which it reportedly charges competitors excessive fees to access to be able to complete calls between wireless networks. That, competitors said, stifles competition.

“América Móvil and Telcel are currently analyzing the scope and legal grounds of said resolution in order to exercise any and all applicable legal remedies,” the company said in a statement posted on its website soon after the Mexican regulator’s decision became public.

América Móvil, owned by tycoon Carlos Slim, had 225 million mobile subscribers at the end of last year, including 64 million in Mexico, where the scenario with its competitors is rather messy. Telcel and its fixed-line sister company Telmex, and a group of competitors including Televisa and TV Azteca have filed a flurry of complaints trading monopolistic practice accusations against each other.

Earlier this month, Televisa announced its intention to buy a 50 percent stake in Telcel competitor Iusacell for $1.6 billion, to enter the wireless market itself and seemingly put pressure on América Móvil’s industry chokehold.

Claro, the island's largest telephone service provider, recently participated in an FCC wireless license auction.

América Móvil has a similar market advantage in Puerto Rico as the owner of Claro, the incumbent carrier and competitor in multiple telecom segments: landline and wireless telephony, Internet and paid television services. Claro, which controls the island’s largest telecom network, must also allow competitors to interconnect and be able to offer their services.

More than once, competitors have complained over Claro’s fees, taking the matter up with the Telecommunications Regulatory Board in Puerto Rico and the Federal Communications Commission in Washington D.C.
The Mexican carrier’s local mix of subscribers includes a little more than 1 million fixed-line customers, some 700,000 wireless clients and several hundred thousand more Internet and paid television customers.
The $1 billion fine, which may eventually overturned through appeal in court, has already affected América Móvil’s stock, which on Monday fell by 1.9 percent, the biggest plummet reported since November. América Móvil represents about two-thirds of Slim’s $78.3 billion in publicly disclosed holdings, according to data compiled and reported by Bloomberg on Monday.

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