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Mexico lower house backs telecoms reform, Senate awaits

The logo of America Movil is seen on the wall of the reception area in the company's corporate offices in Mexico City February 13, 2013. REU
The logo of America Movil is seen on the wall of the reception area in the company's corporate offices in Mexico City February 13, 2013. REU

By Dave Graham and Miguel Gutierrez

MEXICO CITY (Reuters) - Mexico's lower house of Congress approved a sweeping reform of the telecommunications industry early on Friday, sending legislation that aims to reduce Carlos Slim's dominance of the phone market to the Senate.

The reform bill, which also seeks to curb the power of Mexico's main broadcaster, Televisa, intends to open up the long closed industry to more foreign competition and give regulators the power to compel dominant companies to sell assets.

Since Mexican President Enrique Pena Nieto unveiled the plan at the start of last week, shares of Slim's phone giant America Movil and Televisa have taken a hit.

Pena Nieto's reform would give regulators the power to force companies with more than 50 percent of a market to dispose of assets. America Movil has about 70 percent of the Mexican mobile business and 80 percent of the fixed line market. Televisa has roughly 60 percent of the broadcasting market.

Pena Nieto hailed the lower house decision, calling it "excellent news" for Mexico on his Twitter account.

"It's a decisive step for increased coverage, better prices and improved quality in service and content," he said.

Mexico's Senate will now discuss the bill, and lawmakers in Pena Nieto's ruling Institutional Revolutionary Party, or PRI, say they believe it should pass before the current session of Congress concludes at the end of April.

Lawmakers in the lower house made some amendments to the bill, agreeing to tighten the planned opening of Mexico's TV and broadcasting sector to foreign investment to what other countries permit in their respective markets.

The initial bill allowed foreign investors to take up to 49 percent ownership of TV or radio operators.

The lower house, which voted overwhelmingly in support of the bill, also agreed to change a section granting the president the right to give an opinion on the awarding of concessions. Instead, the minister of communications will do this.

TV BECKONS

On Thursday, America Movil's shares recovered some ground after investors were encouraged by the possibility Slim, the world's richest man, could profit by entering Mexico's TV market, which he has been kept out of, so far.

After the markets closed on Thursday, America Movil said it had obtained the exclusive broadcast rights in Latin America, except Brazil, for the 2014 winter Olympic games as well as the 2016 summer Olympics.

PRI lawmakers say privately that Slim will be allowed into television and that he has been getting ready to challenge Televisa and Mexico's other main broadcaster, TV Azteca , in the sports broadcasting market.

Slim acquired large stakes in top flight soccer teams Leon and Pachuca last August, and this week, media reports said he was considering buying broadcasting rights for Guadalajara, one of Mexico's biggest clubs, which has won a record 11 league titles.

Asked if the reports of his interest were true, a spokesman for Slim said: "there's nothing for the moment."

Shares of America Movil rose by more than 2 percent in early trading on Friday, while Televisa was barely changed.

Since the reform was presented on March 11, shares in America Movil have fallen by just over 7 percent. Over the same period Televisa's stock has lost some 6.3 percent of its value and shares of TV Azteca are down about 7.8 percent.

(Editing by Steve Orlofsky and Leslie Gevirtz)

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