Telco says ruling ignores rising competition in Mexico; pledges to challenge decision.

America Movil confirmed this week that Mexico’s telco regulator has ordered a functional separation of its fixed-line retail and wholesale operations.

The Instituto Federal de Telecomunicaciones (IFT) said America Movil must incorporate a new legal entity independent from Telmex-Telnor that will exclusively provide wholesale services related to local loop and shared access, and use of passive infrastructure.

Implementation of the functional split will be based on a separation plan drawn up by the telco and approved by the IFT.

It is one of several alterations to asymmetric regulations imposed by Mexico on America Movil in March 2014 in a bid to curb its dominance.

In addition to a functional separation of the telco’s wholesale operations, the regulator this week also ordered America Movil to adopt the principle of equivalence when it comes to the terms under which it provides services to MVNOs.

America Movil said in a statement that this week’s resolutions "will be challenged in accordance with applicable law."

The telco argued that the order does not take into account "the profound changes in the Mexican telecommunications sector" since the asymmetric regulations were first imposed in 2014.

Indeed, months after the regulations were rolled out, AT&T shook up the market by agreeing to acquire Iusacell for $2.5 billion. It has been aggressively competing with America Movil’s domestic operation ever since.