Mexico phone competition to heat up with numbers war

Tag : Telephone Switch

Smaller rivals of Slim's cell-phone company America Movil andfixed-line giant Telmex have long yearned for the so-called"number portability" and are expected to take clientsaway from the market leaders.
Not being able to keep one's number when changing to a new phonecompany was considered an artificial barrier to competition becauseclients often did not want to lose a long-held number, known byfamily and friends.
The new measure, which already applies in much of Europe, willapply to both fixed-line and mobile phones.
"It is highly probable that the larger operators such asTelcel (America Movil) and Telmex in Mexico ... will end up beingnet donors, at least in the first 12 months after portabilityimplementation," Moody's said in a report.
Of the 70 million cell phones in Mexico, America Movil(AMX.N)(AMXL.MX) has 70 percent of the users, and of the 20 millionfixed lines, Telmex (TELMEXL.MX)(TMX.N) operates 90 percent.
With the new regulations, smaller mobile rivals such as Spain's Telefonica (TEF.MC) and Iusacell and smaller fixed-line operators like Axteland Alestra could start to seduce America Movil or Telmex clientswith attractive offers and packages.
Analysts say it is difficult to calculate how many clients willswitch operators, although it is expected to be fewer than 5percent of telephone users, based on similar European experiences.
"The big players are going to be the most affected," saidMartin Lara, an analyst with Vector brokerage. "Market shareloss will speed up."
Phone users, analysts say, will be the big winners as rates areexpected to come down with operators waging a war of new options tokeep current subscribers and attract new clients.
"Portability is a measure that will benefit all users ...given that it will step up competition in the sector and will bringabout better prices and quality," the FederalTelecommunications Regulator said in a statement.
(Editing by Maureen Bavdek)