By Noel Randewich
MEXICO CITY (Reuters) – President Enrique Pena Nieto and industry executives praised a three-year-old overhaul of Mexico’s telecommunications sector on Monday as it faces a major challenge from billionaire Carlos Slim in the Supreme Court.
The number of Mexicans with cellphones surged by 20 million to 81 million in 2016 since the constitutional reform, while the number of Internet users has expanded to 65 million from 41 million, Pena Nieto said in an apparent bid to increase public support for the law.
He held the event as the Supreme Court considers whether to undo parts of the reform that tilted the playing field against Slim’s long-dominant America Movil SAB de CV and led to steep drops in prices that Mexicans pay for cell phone service and internet access.
“To not have made the change would have been irresponsible. It would have condemned Mexico to falling behind,” Pena Nieto told hundreds of government officials and industry executives at the presidential residence Los Pinos.
AT&T in 2014 paid $4.4 billion to buy Mexico’s No. 3 and No. 4 carriers and challenge Slim, and it has earmarked another $3 billion through 2018 to expand its network.
“The Mexican government’s commitment was key to our decision to invest in Mexico, and we trust that the decisions that are about to be made will take into account what’s best for consumers,” said Kelly King, head of AT&T in Mexico.
The law was a major political victory for Pena Nieto, but Slim is fighting back, with his lawyers arguing to the court that legislators did not have the right to create “asymmetrical” rules meant to handcuff America Movil and help smaller players like Telefonica.
The court is considering part of the reform that prohibited America Movil from charging other telephone carriers for connecting their calls made to customers on its network, while letting those companies charge America Movil for connecting its calls to their customers.
A favorable ruling for Slim might eliminate that rule and even force America Movil’s rivals to reimburse it for calls made in recent years. That could boost America Movil’s market capitalization by $21 billion, an increase of about 40 percent, according to a report by Banamex.
The Supreme Court has not said when it might rule on the case. However, last week it ruled on a minor, related case. Some industry watchers have speculated that a ruling on the larger case could come in the next few weeks.
America Movil holds over two-thirds of Mexico’s mobile subscriptions. A company spokesman declined to comment on the case in the Supreme Court.
(Reporting by Noel Randewich; Additional reporting by Noe Torres; Editing by Frank Jack Daniel and Leslie Adler)