America Movil fined $69.5 million by Mexican regulator

Mexico’s telecoms regulator, the Federal Telecommunications Institute (IFT), has issued a fine of 1.3 billion pesos (~$69.5 billion) against the country’s biggest mobile operator, America Movil.

 

The regulator decided to levy the fine after the company’s subsidiary, Telefonos del Noreste (Telnor), failed to share information about the availability of its infrastructure with its competitors. As part of the country’s anti-monopoly ruling in 2014, Telnor is required to disclose this information to its rivals to help promote competition.

 

America Movil, naturally, will argue against the fine.

 

“This arbitrary, illegal and disproportionate fine affects the legal certainty in a sector that requires important investments,” said the company in a statement.

 

With 75 million Mexican mobile subscribers, America Movil dwarfs its nearest competitors, Telefonica’s Movistar (25.8 million subs) and AT&T Mexicco (12.5 million subs). AT&T and Telefonica signed network sharing agreements last year in an effort to combat America Movil’s dominance, but it remains an uphill battle.

 

Despite cries of the fine being “disproportionate”, the reality is that it represents just 6% of Telnor’s annual revenue, and it seems likely that the company will simply continue with business as normal. 

 

“Penalties of that amount, it’s like the cost of doing business,” said Roger Entner, an analyst at Recon Analytics.

 

This begs the question: is the IFT really doing enough to encourage competition?

 

If the deep pockets of America Movil can shrug off such a sanction so easily, then more severe measures are needed to ensure the Mexican telecoms market remains competitive in the future.