Mexico’s much-lauded landmark 2013 telecom reform has done little to increase competition in the sector, new research shows. America Movil (NYSE: AMX), the biggest wireless telecom and pay TV provider in Latin America, which is controlled by billionaire Carlo Slim Helú and his children, continues to control Mexico’s landline and wireless markets, a report by The Competitive Intelligence Unit ( CIU), a Mexico City-based consulting firm, said Monday.
The firm, which focuses on the telecom sector, said that with a market share of 60.8 % in the third quarter of 2016–0.7% less than the second quarter of 2013–America Movil shows “persistent and excessive market concentration.”
“At this pace America Movil will stop being preponderant many years from now,” Ernesto Piedras, CIU’s CEO, told me.
Arturo Elias Ayub, Slim’s son-in-law and spokesperson, did not respond to a request for comment.
Piedras said some effects of the reform might be seen by 2020. By then, he predicts, the market share of competitors could reach 44.5% against America Movil’s 55.5%.
According to the Federal Institute of Communications, or IFT, the country’s independent telecommunications regulator, companies that control more than 50% of market share are considered “preponderant economic agents.”
The CIU analysis is based on the IFT’s first assessment of the impact asymmetric regulations (regulations that apply only to the largest telecom firms in the country) have had. The IFT admits that the measures imposed on America Movil “have been inadequate and ineffective” in curtailing America Movil’s dominant market share.
The CIU’s Piedras said that despite failing to bust up America Movil’s monopoly, the reforms have resulted in lower service fees. But, according to Piedras, this has more to do with AT&T’s expansion into Mexico than anything else.
AT&T, which had been America Movil’s partner for more than two decades, entered Mexico’s market on its own in late 2014 by buying up two Mexican telecom carriers. AT&T currently has 13.5 % of Mexico’s wireless market, according to the CIU.
Piedras said that while the telecom regulations “are more or less good,” the problem has been the lack of teeth to force America Movil into compliance.
The 2013 overhaul was aimed at curbing America Movil’s dominant fixed line and wireless market share in Mexico by forcing it to share cell towers and other equipment with rivals.
Piedras told me that so far, America Movil has not shared its cell towers and has yet to inform the IFT where they are located.
Last month, the IFT gave America Movil 65 working days to present a proposal for the legal separation of a part of its fixed-line infrastructure from its cellular business.
Piedras claims that Slim’s net worth decline in the past years has had less to do with the telecom reform than with the drastic depreciation of the peso. In the past month the Mexican peso has been recovering.
With an estimated net worth of $61.6 billion, Slim is currently the world’s 5th richest person, according to the Forbes Real Time Billionaire Ranking.