Mexico's antitrust regulator said Tuesday it has set caps on the amount of spectrum a single wireless carrier can obtain as the government prepares to auction bandwidth in a bid to increase competition in the market.

The Federal Competition Commission, or CFC, said it's recommending that the federal telecommunications regulator limit spectrum to 80 megahertz per carrier in the 800Mhz, 1700 MHz, and 1900 MHz frequency bands.

The CFC said its recommendation is aimed at encouraging new operators to enter the market without inhibiting growth of existing service providers. The cap will allow existing operators to increase their spectrum by at least a third, it said.

America Movil's (AMX) local unit, Telcel, is the market leader with 72% of the country's mobile subscribers, followed by the local unit of Spain's Telefonica (TEF) with nearly 20%. Other operators are Nextel Mexico, a unit of NII Holdings Inc. (NIHD), and Grupo Iusacell (CEL.MX).

The four companies reported a combined 80 million subscribers at the end of June, among a population of around 107 million.

The government expects to start the bidding process for the 1700MHz and 1900MHz frequency bands this month.

-By Anthony Harrup, Dow Jones Newswires; (5255) 5001 5727, anthony.harrup@dowjones.com