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Telmex Seen Closer to Entering Mexican TV Market
 Cyntia Barrera Diaz - Reuters
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August 18, 2010
Mexico City - Mexican billionaire Carlos Slim may be getting closer to finally obtaining approval to plunge into Mexico's lucrative television market, seen as key to survival of his telephone giant Telmex.
"It is possible and desirable," Mony de Swaan, head of Mexico's telecom regulator Cofetel, told Reuters on Tuesday when asked whether Telmex might enter the Mexican television market in 2010.
"At a government level, we cannot continue talking about (telecom services') convergence while we impose artificial barriers" to players," he said.
Telmex, which controls 80 percent of Mexico's fixed phone lines, has long sought government approval to add television services to the phone and Internet services it offers its customers.
Such a move would help Telmex tap the market led by broadcast and cable affiliates of Grupo Televisa, the world's leading producer of Spanish-language TV content.
But Telmex has been held back by government and rivals' complaints, which it denies, that the company has failed to cut the rates it charges to other phone operators for using its massive transmission network.
Television is seen as vital to Telmex's survival as the company loses business to smaller competitors that offer cheaply bundled Internet, television and phone service.
The company is scrambling to quickly build its Internet business to make up for a decline in its fixed-line and long-distance telephone revenues as clients switch to cellphones and phone services offered by cable television companies.
Mexico's government has pointed to competition concerns as part of the reason it has denied Telmex the go-ahead to offer television services.
"We have said that Telmex has to meet certain conditions to tap the video market," Eduardo Perez Motta, head of Mexico's competition agency, told Reuters last week.
"We are saying that it has to be evaluated, and if (Telmex) has not fulfilled (requests), we invite it to do so shortly so that it can tap the market," he added.
Cofetel has the power to recommend that Telmex be granted approval to offer television service. That recommendation would require final approval from the Communications Ministry.
In July, Telmex's chief financial officer voiced frustration over the company's inability to say how soon it might be able to enter the television market.
De Swaan said his agency would likely take steps to improve competition in Mexico's telecommunications industry, an important sector in a nation where economic activity is concentrated in the hands of a few massive companies.
One option de Swaan mentioned would entail auctioning off new slices of the country's mobile phone spectrum and unused fiber optic strands that would strengthen Mexico's communications backbone.
On Monday, Cofetel approved a controversial bid from Televisa and partner Nextel, a unit of NII Holdings, to enter the mobile phone market, ratcheting up competition for Slim's America Movil, Latin America's leading cell phone firm.
The regulator said that the bid of Televisa and Nextel was valid despite objections from some critics who said the process allowed the companies to present a low-ball bid for wireless spectrum.
(Additional reporting by Tomas Sarmiento; editing by Missy Ryan, Matthew Lewis, Gary Hill)
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