Mexico’s Carlos Slim to cut phone fees to skip record fine


MEXICO CITY — Mexico’s competition watchdog has ordered Carlos Slim to cut charges he levies on mobile phone competitors in exchange for dropping a record fine, exacting a small concession from the country’s dominant telecoms mogul. Slim’s cash cow, mobile giant America Movil, said o n Thursday it had agreed with Mexico’s Federal Competition Commission (Cofeco) to cut by about 20 percent its interconnection rates, the fees it charges rivals to tap its mobile network. Analysts said the deal was a minor setback to Slim, and shares in America Movil even rose slightly. The settlement follows a series of steps by regulators to curb the power of the tycoon, who controls some 70 percent of Mexico’s mobile market. The latest decision ends a battle over a fine worth nearly US$1 billion handed down by the regulator in April 2011 against America Movil’s local brand Telcel. Then, the regulator found that Slim’s company charged unfair fees to competitors. “On paper, we can’t say that this is a huge blow to Slim. But it is an achievement that avoids a long and uncertain legal fight. Those battles have left the sector paralyzed,” said Carlos Ramirez, an analyst with the Eurasia Group. Slim, the world’s richest man, counted on a 0.39 pesos (US$0.03) per minute mobile-to-mobile interconnection rate last year. The Cofeco decision this week will trim that to 0.31 pesos per minute in 2014. The cut was in line with what Telcel had agreed to with several local operators late last year.

But it was a big drop from what America Movil was charging at the start of 2011, when the interconnection rate for many of its rivals was about 0.95 pesos (US$0.07) per minute. That cut shaved about 3 percent, or roughly US$390 million, from America Movil’s quarterly revenue, executives told analysts on a call last year. The company does not publish details on how much money it makes from interconnection fees.