Telefonos de Mexico SAB, the country’s largest phone carrier plunged the most in the stock market since December 2008 after the government rejected its application to start offering video services.
Telmex, as the Mexico City-based company is known, dropped 6.4% to 10.18 pesos. The shares have risen 1.7% in 2011, compared with the 7.6% slump in the Mexican IPC index.
The phone carrier controlled by billionaire Carlos Slim’s America Movil SAB can’t sell TV service because it hasn’t met some conditions of its license, including efficiently providing connections to rivals, the Communications and Transportation Ministry announced on May 27. The ruling followed five years of silence from the government agency, which was forced to respond following a court order this month.
Javier Mondragon, the regulatory and legal affairs director at Telmex, said the company will go back to court this week in its push to provide television. “Telmex has complied with all the requirements,” he said last week. “We think this decision by the ministry isn’t supported by the law.”
The company is seeking TV service to compete with cable carriers controlled by Grupo Televisa SA that offer packages of phone, Web and video. Telmex has a total of 15.6 million phone lines, though it lost 29,000 in the last quarter as cable providers lured some subscribers away.
Telmex has sought to sell a TV service since companies in the phone and cable industries signed an agreement with the government in 2006 outlining the requirements necessary for each to enter the other’s business. Mexico City-based Televisa has offered phone service through its cable units since 2007 and has more than 500,000 voice customers.
Telecommunications tycoon who is also rated by Forbes as the wealthiest man on earth has recently suffered several setbacks to his great surprise. The worst of all a one billion US dollars fine on América Móvil, for allegedly abusing its hegemonic influence in the mobile phone industry. The corporation has appealed and is waiting a ruling.