Colombian lawmakers have proposed a bill that would put Mexican billionaire Carlos Slim, currently ranked as the richest person in the world, in a tenuous position with his wireless empire, reported Bloomberg news Wednesday.
The billionaire Slim is facing an assault on a fragment of his wireless empire in Colombia as lawmakers press for tighter market regulations and try to stop him gaining licenses for faster smartphone speeds, according to Bloomberg.
Last week a group of Colombian lawmakers proposed a bill that would ensure that no one company could control more than 30% of the wireless market. This could force Slim’s communications company, America Movil, to break up or return licenses already bought.
The government is currently drawing up regulations for the auction of 4G radio licenses, and early proposals outlining the bidding process excluded Slim’s company America Movil.
Slim’s company at the moment holds about 60% of Colombia’s mobile users, making up its third-largest market as well as being one of its most lucrative. A crackdown on regulations would hobble the company, hinder business and increase client costs, said a representative.
Juan Carlos Archila, president of America Movil’s Colombia branch said the move would “basically sentence the company to a slow death.”
The bill was introduced by opposition senator Jorge Robledo, and is backed by 18 other lawmakers including president of Colombia’s Senate Roy Barreras, who said there was a good chance the bill would pass.
Competitors in the business have accused America Movil of using its weight and size to prevent customers from switching providers. Empresa de Telecommunicaciones de Bogota, Colombia’s second largest telecommunications company also wants to keep America Movil’s Claro out of the auction, which is rumored to be taking place in December.
Analysts said that while the Colombian government is unlikely to lay an outright ban on America Movil from participating in the 4G auction, it could place undesirable limitations on the company in order to bid. The company could be required to share infrastructure with rivals or to allow competitors to use its networks. This could impact on the company’s willingness to invest in a high-speed network.
The Colombian arm of Slim’s empire in 2011 recorded a profit margin of around 47%, adding to the telecommunication mogul’s estimated $77 billion fortune. Last year the billionaire fat cat, praised Colombia’s open attitude towards foreign investment, however in September this year America Movil was fined $6.6 million for charging unfair cancellation fees.
In Mexico a $1 billion fine against the company for anticompetitive behavior was dropped in exchange for concessions like lower connection fees.
“What should be asked is if the way to promote competition is by eliminating the leading competitor,” said Archila, who blamed the pressure on lobbying from the company’s rivals.