Mexico's Phone, TV Companies Raise Tone Of Dispute

Date : 03/03/2011 @ 12:26AM
Source : Dow Jones News
Stock : Grupo Televisa S.A. (TV)
Quote : 20.62  0.15 (0.73%) @ 4:02PM

Mexico's Phone, TV Companies Raise Tone Of Dispute

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A battle between Mexico's biggest phone companies and top broadcasters heated up Wednesday in a series of accusations and counter-accusations over interconnection rates and investment.

The flurry of charges flew in a series of press releases from America Movil SAB (AMX, AMX.MX) unit Telcel and Telefonos de Mexico SAB (TMX, TELMEX.MX), controlled by Carlos Slim, Grupo Televisa SAB (TV, TLEVISA.MX), controlled by Emilio Azcarraga, and other phone operators.

Bestel and Cablevision, subsidiaries of Televisa, as well as phone companies Axtel SAB (AXTEL.MX), NII Holdings Inc. (NIHD) unit Nextel Mexico, and Grupo Iusacell, among others, put out a statement calling on the federal government to apply "pro-competitive" regulations, while offering reciprocal free interconnection with Telcel.

Telcel responded by saying that smaller operators are seeking free services because they haven't invested in infrastructure of their own. Telcel said a number of them haven't passed on reductions in interconnection rates since 2005 to their customers.

In separate releases, fixed-line phone company Telmex and Televisa aired details of a dispute over a network contract that Bestel won a year ago from the state workers' social security institute ISSSTE.

The slew of statements suggests the rift between Slim's companies and the country's broadcasters is far from being resolved.

In recent weeks, Telmex, Telcel and Grupo Carso (GPOVY, GCARSO.MX) withdrew advertising from leading broadcaster Televisa to the tune of about $70 million a year in a disagreement over advertising rates. Slim was then refused space on No. 2 broadcaster TV Azteca SAB (TVAZTCA.MX) unless Telcel offered lower interconnection rates to mobile company Iusacell.

TV Azteca, whose controlling shareholder Ricardo Salinas Pliego also controls mobile phone company Iusacell, later said it's willing to sell Slim advertising, but called for broad debate on interconnection.

TV Azteca operates two of the country's six nationwide broadcast channels, and Televisa runs the other four. Telcel has about 70% of the country's mobile subscribers.

Last month Telcel offered to extend to other operators the same interconnection rates agreed among Telcel, Telmex and the local unit of Spain's Telefonica SA (TEF), which is Mexico's No. 2 mobile operator.

The interconnection rates agreed were 95 peso cents (8 U.S. cents) per minute in 2011, falling gradually to 69 peso cents in 2014, as well as introducing billing by the second after the first minute. Others have argued that the mobile interconnection rates should be around 40 peso cents per minute.

The antitrust regulator said Tuesday that the spat among the country's richest entrepreneurs could have a positive side by leading to a solution to two problems in the country: high interconnection rates and lack of competition in television.

Telmex, while awaiting government authorization to enter the TV market, has a billing and marketing agreement with satellite TV provider Dish Mexico. Televisa, whose cable businesses are already offering phone services, says Telmex's relationship with Dish Mexico goes beyond what Telmex is authorized to do. Dish competes directly with Televisa's Sky Mexico satellite services.

-By Anthony Harrup, Dow Jones Newswires; (5255) 5980 5176,


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