Telecom Sector Shifting Towards Government Control
Mexico is transitioning from a competitive market model in telecommunications to one where the federal government aims to be both an operator, regulator, and authority simultaneously. This shift is reflected in the proposed Telecommunications and Broadcasting Law.
Potential Negative Impacts of the Proposed Telecom Law
- Discourage future investments in the telecom sector
- Possibly violate international treaties to which Mexico is a party
- Leave the industry with less protection than even illegal activities
The proposed legislation lacks adequate defense mechanisms for the industry, offering only indirect protection through appeals without suspension against authoritative acts and penalties tied to gross annual revenues of operators.
Moreover, all decisions would be subject to the discretion of a single individual heading the Digital Transformation and Telecommunications Agency (ATDT), opening the door to political discretion.
The ATDT would be the sole federal authority for infrastructure deployment, creating uncertainty for concessionaires regarding contributions and obligations.
Canieti’s Concerns
The National Chamber of the Electronic Industry and Information Technologies (Canieti) reviewed the proposed law, stating it increases rather than corrects existing issues in current legislation.
- Institutional arrangement based on a single individual directly accountable to the Federal Executive
- Granting commercial concessions to the Federal Executive for direct market participation
- Assigning commercial radioelectric spectrum concessions to executive branch dependencies without compensation
- Eliminating the competition neutrality definition, allowing for state exclusion when operating as a commercial concessionaire
- Providing the ATDT with extensive regulatory powers and de facto legislative authority, potentially affecting the autonomy of competition authorities
- Authorizing the ATDT to grant radioelectric spectrum usage permissions without public bidding through intelligent radio communication networks and commercial/industrial areas licenses
Canieti urges all parties to collaborate in crafting legislation that benefits both the industry and users.
Pemex Corruption Allegations Impacting Investment
Norwegian Sovereign Fund Divests from Pemex Bonds
The Norwegian Government Pension Fund Global, the world’s largest sovereign wealth fund, sold all its fixed-income investments in Mexican oil company Pemex due to corruption suspicions. The fund’s ethics council found multiple accusations or suspicions of corruption involving Pemex from 2004 to 2023.
This development raises concerns about Pemex’s debt profile and the reactions of other bondholders. The already fragile financial situation of Pemex is exacerbated by corruption allegations, with direct implications for the Mexican government due to its financial support.
