Telmex triple-play?

Telmex sacrifices market share in pursuit of triple-play.

Mexico has been looking to expand its fibre optic network under the “Telecommunications for all” initiative from the Federal Electricity Commission (CFE).

This initiative opened the door for the government to work with private companies to install the necessary fibre optic lines. It was expected that Carlos Slim’s Telmex would take the lead but ultimately he declined, allowing Altán Redes to form an alliance with the government.

That Slim would allow another player to move in may seem surprising to some but a telecommunications executive in Mexico explains, “Slim thinks very carefully when he wants to enter and when it is better to let others in. He was upset with Altán Redes’ appointment but more because of the advantages the government offered Altán that were not offered to América Móvil.”

“Slim thinks very carefully when he wants to enter and when it is better to let others in.”

Telecommunications executive, Mexico

There was another powerful reason why Slim did not pursue this opportunity reports an telecommunications analyst, “Slim’s dominance has repeatedly prevented him from aspiring to the crown jewel, which for him is offering completely integrated packages, ‘triple- or quadruple-play’. The regulator has prevented it and the scheme of asymmetric regulation has been maintained.”

A former senior regulatory official in Mexico expands, “Slim, for years, has wanted to remove the asymmetric regulation that prevents him from diversifying into new products. He even tried reforming his conglomerate so the regulator no longer applies the dominance criterion but wasn’t successful.”

“Slim, for years, has wanted to remove the asymmetric regulation that prevents him from diversifying into new products.”

A former senior regulatory official, Mexico

The Instituto Federal de Telecomunicaciones (IFT) has been a thorn in Telmex’s side since March 2017 when it ordered the “functional separation” of the business. After numerous extensions and appeals, this process seems to be coming to a head. In mid-November Telmex executives and representatives from the Telephone Operators Union (STRM) met with government officials and the IFT to discuss “triple-play for Telmex”, “raising fees charged to other companies for using their network” and “labour liabilities”. Reportedly, these issues had forced Telmex into loss over the previous two years.

Interestingly, the IFT acknowledged for the first time that Telmex owns less than 50% of the national market. With Slim enjoying good relations with the current government, does this mean that triple-play could soon be in sight for Telmex?

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