Mexican Regulators Allow América Móvil to Charge for Interconnection

Mexico's telecommunications regulator said Thursday that the country's dominant operator, América Móvil SAB, can charge competitors for completing calls on its networks next year, but will have to pay more for the calls that its customers make to rival carriers.

The decision takes into account costs associated with interconnection, while maintaining different rates to enable rivals to compete with the dominant player, the Federal Telecommunications Institute, or IFT, said in a statement.

As part of an overhaul of the telecommunications sector, Mexico's Congress passed a law in 2014 under which América Móvil had to complete incoming calls and messages without charge, since it has more than a 50% market share.

América Móvil, controlled by billionaire Carlos Slim, challenged the law and in August the Supreme Court ruled that it was up to the regulators, and not legislators, to set interconnection rates.

The court stipulated that competitors wouldn't have to pay any retroactive interconnection fees for the years in which América Móvil didn't charge.

The IFT said that América Móvil next year would be able to charge rivals just under 3 Mexican cents a minute for completing incoming voice calls and about three-quarters of a cent for text messages. Other operators would be able to charge 11 Mexican cents for incoming calls and almost 2 cents for messages.

The difference between the rates is among the biggest anywhere in the world and should be an incentive for competitive markets to the benefit of consumers, the IFT said. Mexican telecommunications costs have fallen sharply in the three years since the laws were changed to counter Mr. Slim's dominant position in the market.

América Móvil competes in the wireless market with U.S. telecom giant AT&T Inc. and Spain's Telefónica. It had 73.3 million wireless subscribers at the end of September, compared with AT&T's 13.8 million and Telefónica's 24.5 million.

"The elimination of interconnection fees has served as a headwind to América Móvil's business over the past few years," Barclays analysts said in a recent report. "If the IFT decides on any rate higher than zero, it should serve as a positive for América Móvil."

Write to Anthony Harrup at anthony.harrup@wsj.com

(END) Dow Jones Newswires

November 02, 2017 23:05 ET (03:05 GMT)