The stock of America Movil SAB de CV (ADR) (NYSE:AMX) closed at $ 17.08 losing 1.27% in yesterday’s trading session. Mexico’s industry regulator, The Federal Institute of Telecommunications (IFT), is currently holding discussions regarding a proposal that seeks to allow America Movil to resume charging its wide array of competitors for the calls they make to its network. Other companies will also have the freedom to charge their respective competitors for using their networks.
The $20 million per peso cent provided by calculations by AT&T Inc (NYSE:T) was compiled from the company’s own data and the IFT statistics. The estimate doesn’t entail any potential reduction in the fees that non-dominant providers can charge. AT&T declined to bring forward any documents detailing its calculations.
The assistant vice president of external affairs for AT&T in Mexico, Cristina Ruiz de Velasco, opined, “Keep in mind the overall competitive effect in the industry could be of up to $40 million per peso cent, taking into account what the preponderant (America Movil) will gain, coupled with the transfer of competitive resources from the non-preponderants.”
The Supreme Court made its ruling in August. It outlined that IFT rather than legislators should be the one making the determination regarding the interconnection fees, a matter that ended up sparking a wild debate within the sector in line with establishing a proper rate.
The IFT is currently looking into a proposed cut out to charge competitors 0.03686 pesos per minute for mobile calls to each customer within its network. A recent report indicates that the rest of the providers could end up charging America Movil and other competitors 0.1176 pesos per minute for calls.
Analysts have said that there exists quite a wide gap between America Movil and its large number of competitors. The IFT statistics indicate that Cellphone service prices have been on the decline, and that is represented by a figure of about 40 percent.
A section of the foreign firms have come forward to state that ending the zero rate could end up posing grave consequences.
