| | |  News Around the Republic of Mexico 
America Movil to Suspend Some Mexico Lines; Telefonica Balks
 Adriana Lopez Caraveo & Crayton Harrison - Bloomberg
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April 09, 2010
Mexico’s two biggest mobile-phone carriers are at odds over a possible government demand to halt service for 27.5 million unregistered subscribers, with America Movil SAB planning to comply and Telefonica SA refusing.
The government has told carriers to deny service to users who haven’t submitted personal information by April 10 for a national database. Customers who lose service can get it back by signing up for the registry, America Movil said today in an emailed statement.
Telefonica, which trails Carlos Slim’s America Movil in Mexican mobile-phone users, says it won’t shut down service because telecommunications are a constitutional right. More than a third of Mexico’s wireless subscribers have yet to provide information, putting the carriers’ revenue at risk.
America Movil could lose about 120 million pesos ($9.8 million) a day if it shuts off unregistered customers, Martin Lara, an analyst at Itau Securities in Mexico City, said in an interview. The Mexican unit makes up 36 percent of total revenue and had sales of 142 billion pesos last year.
The carrier has more than 70 percent of Mexico’s subscribers, while Madrid-based Telefonica has over 20 percent. That company’s Mexico division accounted for 1.55 billion euros ($2.1 billion), or 2.7 percent, of total sales last year.
The registry is designed to prevent criminals from using mobile phones in extortion and kidnapping schemes, allowing law enforcement to use the database to track call activity. Subscriber rolls could return to normal in a week or two, assuming the carriers and the government resolve the situation, said Lara, who advises buying the shares of Mexico City-based America Movil.
No Identification
Many customers don’t have the government identification number necessary to register, and some don’t know how to send the required text message, Madrid-based Telefonica said in an e- mailed statement.
Dan McCosh, a spokesman for Grupo Iusacell SA, Mexico’s third-biggest wireless company, declined to comment. A spokeswoman for NII Holdings Inc., the smallest of Mexico’s four carriers, didn’t respond to phone and e-mail messages.
Raul Marin, a spokesman for Mexico’s Federal Telecommunications Commission, declined to comment on Telefonica’s statement. The agency is working with carriers on a plan to allow users who are disconnected to re-establish service, he said.
Telefonica said it would take legal action, if necessary, to keep its subscribers connected.
America Movil rose 44 centavos, or 1.4 percent, to 31.19 pesos at 4 p.m. New York time in Mexico City trading. Telefonica rose 42 cents, or 2.4 percent, to 17.92 euros today in Madrid.
To contact the reporters on this story: Adriana Lopez Caraveo in Mexico City at adrianalopez(at)bloomberg.net; Crayton Harrison in Mexico City at tharrison5(at)bloomberg.net
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