Mexico City, D.F. – The division of Mexico telecommunications company, Telmex, is expected to take around three years to complete.
The company has announced it will split into two companies, one to manage its infrastructure and another to provide telephone and internet services. Instituto Federal de Telecomunicaciones (IFT) explained that after the approval the new company can run for up to two years once they start operating.
América Móvil is the company that will be taking over the infrastructure portion of Mexico’s largest telecommunications company. Although América Móvil has indicated its interest in offering pay television, IFT affirmed that to date, it has not submitted a formal request for it.
The concept behind the move is to give dynamism and competition to the market on a level playing field and is not about selling assets. In spite of this, the news was badly received in the market with the price of América Móvil shares falling 5.7 percent.
José Eduardo Coello, an analyst at Ve por Más, said that the news is negative for the company because changes in all its business units could lead to higher expenses and a lower market share.
The new proposal is set for May at which time details of who will join the council of the new company and which members of the telecommunications industry may participate after prior authorization from the institute will be addressed.
If approved, Telmex would be a client of its new company.