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Mexico bill to curb Slim's empire due this week: lawmaker

Mexican billionaire Carlos Slim walks on stage for an event of the Fundacion Telmex Mexico Siglo XXI (Telmex Foundation Mexico XXI Century)
Mexican billionaire Carlos Slim walks on stage for an event of the Fundacion Telmex Mexico Siglo XXI (Telmex Foundation Mexico XXI Century)

By Dave Graham

MEXICO CITY (Reuters) - Mexico will send legislation to Congress this week to flesh out a reform that seeks to curb the power of telecoms mogul Carlos Slim and the country's top broadcaster, Televisa, a senior lawmaker said on Wednesday.

Slim and Televisa have dominated their industries in Mexico for years, and one aim of the shake-up is to cut their share of the market to below 50 percent.

Emilio Gamboa, Senate leader of the governing Institutional Revolutionary Party, or PRI, said the so-called secondary laws to implement the government's overhaul of the phone and television markets will be presented this week.

The last regular working day for Congress this week is Thursday, and a PRI official told Reuters that that was the day the secondary laws, which were originally supposed to be passed by December, were likely to be presented.

According to a version of the secondary laws dated March 19 seen by Reuters, the legislation will give Mexico's new telecoms regulator extensive powers to police dominant telecommunications companies, right down to the prices and discounts they offer.

The Federal Institute for Telecommunications (IFT), which was created by last year's reform, will be able to force phone companies to seek approval every year for interconnection and infrastructure-sharing terms, the document showed.

Slim became one of the world's richest men after taking control of Mexico's former state telephone monopoly at the start of the 1990s. Today he controls around 80 percent of the local fixed-line business and about 70 percent of the mobile sector.

Televisa, meanwhile, has over 60 percent of the TV market, and many Mexicans complain it has too much sway over politics. But the broadcaster's economic power lags far behind Slim.

The March version of the secondary laws was slightly longer than an earlier draft seen by Reuters in February. It offered more detail on the scope of fines, but upheld the broad sweep of powers the regulator will have to go after Slim and Televisa.

Under the telecoms reform, the IFT will have powers that extend right up to being able to order asset divestitures.

The local mobile and fixed-line units of Slim's telecoms company America Movil, as well as his rival broadcaster Televisa, the world's largest Spanish-language content producer, were declared dominant by the IFT earlier this month, making them the targets for a battery of tougher regulation.

The IFT said Slim's companies must present plans to lower rates for rivals using America Movil's mobile network, scrap roaming charges, open up the fixed-line network and share transmission towers as well as other non-electronic infrastructure.

But the IFT did not order a break-up of his operations, a step the regulator says should only be taken as a last resort.

The IFT has said it could begin to repeal measures against the dominant players once their power has been substantially cut back, and the secondary laws outlined one way it may happen.

"The predominant economic player will cease to have such character when the (IFT) determines that its national market share, considering the variables used to declare it predominant, have been reduced below 50 percent," the document reads.

CONCENTRATION OF POWER

The telecoms overhaul has raised hope that the government is serious about reducing the concentration of power enjoyed by a few families in Latin America's second-biggest economy.

The reform is a central plank of a wider batch of economic measures ranging from taxes to education and energy that President Enrique Pena Nieto pushed through Congress last year.

The 2013 telecoms reform already ensures that Televisa will face more competitors due to the planned auction of new TV networks.

The secondary laws bound for Congress go into particular detail on how the government wants to cut Slim down to size.

A range of offers from the dominant telecommunications player, including promotions and discounts, will only be authorized with the IFT's direct approval, the laws say.

The regulator will have the right to make the dominant player seek annual approval of a range of services for other companies connecting to its infrastructure and network.

Many of the powers detailed in the secondary laws existed under Mexico's old telecoms law. But the former industry regulator, known as Cofetel, was unable to apply them because companies were able to file injunctions preventing the previous antitrust body, Cofeco, from declaring them dominant.

The new telecommunications reform made IFT the highest authority on antitrust issues in telecoms and broadcasting, while separate legal changes mean companies can no longer suspend regulatory decisions pending appeal.

(Additional reporting by Tomas Sarmiento, Elinor Comlay and Christine Murray; Editing by Peter Galloway and Jan Paschal)

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