The Mexican government has proposed far-reaching changes to its telecoms and television industries. A new regulator will have the power to sanction companies with more than 50% of the market. That poses a challenge to billionaire Carlos Slim Helu, the owner of Telmex, which controls 80% of landlines.
The foreign ownership limit in the telecoms market is being hiked from 49% to 100%. Two new free-to-air television channels will be created, which neither of the two dominant players in the television market will be allowed to bid for. The laws have yet to pass through Congress.
What the commentators said
This is Mexico’s “most serious effort yet” to promote competition and hence growth in the country’s oligopolistic telephone and TV markets, said Elisabeth Malkin in The New York Times. One study suggests that the lack of competition in telecoms costs the economy $25bn a year. Penetration for mobile and broadband markets is comparatively low. The same applies to telecoms firms’ investment per person.
This move is part of a recent structural reform drive that has seen Mexico’s new president, Enrique Peña Nieto, take on “the rich and powerful in ways that seemed impossible less than a year ago”, said John Paul Rathbone and Adam Thomson in the FT.
The president prepared the ground by building a cross-party consensus, making it more likely that changes will be implemented. After 12 years of gridlock, “you now have a way of negotiating between the parties that enable legislative progress”, said Duncan Wood of the Woodrow Wilson International Center.
The next step for the president, said the FT, will be to fulfil his promise to prise open the energy sector, currently dominated by state oil group Pemex. Foreign money would boost investment and growth. This move would also “confirm the growing sense among investors that Mexico has a bright future”.