Wall Street Journal | March 9, 2011 | Anthony Harrup
MEXICO CITY—Mexico’s largest phone company Telefonos de Mexico SAB said it plans to split into two companies, one of which will serve rural and marginalized areas where competitors haven’t invested.
The decision by the company controlled by telecommunications magnate Carlos Slim aims, in part, to counter criticism about the firm’s dominant position in fixed-line telephony in the country, where it owns about 80% of the fixed lines.
In a Tuesday press release, Telmex said the new company, which it expects to call Telmex Social, will serve the 46% of the country “in which there is no economic interest of any competitor” to invest and develop telecommunications, and in which Telmex has invested at low profit and sometimes at a loss. Assets, liabilities and equity would be divided up accordingly, Telmex said.
Telmex, which is 59.4% owned by Slim-controlled America Movil, reported 15.6 million lines in operation at the end of 2010, of which 1.8 million were in areas not served by competitors. Most of the revenue from those lines comes from long-distance and call completion.
The new company would pay the same interconnection rates to Telmex as competitors, Telmex said.
The planned division, which company officials have commented on in the past as an idea to be considered, would clarify the differences in Telmex’s operations in those areas, the company said.
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