* Telecom regulator botched ruling in favor of Slim
* Supreme Court to decide whether TV license is legit
* Corruption watchdog says approval process was flawed
By Patrick Rucker
MEXICO CITY, June 25 Mexico's Supreme Court will
decide if billionaire tycoon Carlos Slim can enter the lucrative
television market in a legal case that centers on whether the
government botched a regulatory filing or officials
intentionally let a deadline pass.
The case is due to reach the high court before the end of
the summer. Slim, the world's richest man, is counting on a win.
"We soon expect a favorable decision in this matter,"
Alejandro Cantu, the top attorney for Slim's mobile phone giant
America Movil, told Reuters recently.
Mexico has barred Slim from the television market until his
home phone business, Telmex, gives fair access to rivals.
The court, though, could let Slim proceed if it decides
officials forfeited the right to stop him when it mishandled the
original, four-year-old Telmex paperwork for a television
Telmex was absorbed into mobile phone giant
America Movil last year as Slim consolidated his
Documents reviewed by Reuters showed that in 2008 officials
from Cofetel, the telecommunications regulator, considered
allowing Telmex into the television market, swapped memos and
even drafted a "no" decision, but ultimately failed to respond
in the required time, thus legally opening a door for Slim. [ID:
Mexico's federal comptroller's office is now weighing
sanctions against former Cofetel officials who mishandled
documents and otherwise caused the delays that gave Telmex a
legal foothold to enter the TV market, said an official from the
comptroller's office who declined to be identified because he
was not authorized to speak on the record about a pending case.
The case will likely become a test for a judicial system
that has recently stood up to Slim and other powerful interests
that have long shaped the country.
In a handful of recent decisions, the Supreme Court has
consolidated regulatory power in the hands of Cofetel. The
Telmex TV case will be a further test for the high court,
"Will this be decided on a narrow technicality or whether
the whole issue was tainted? That is the question for a court
that has won trust as the final arbiter on these key telecom
issues," said Shannon O'Neil, a scholar at the Council on
Foreign Relations in New York and an expert on Latin America who
has previously written about Slim and the telecoms industry.
Clues to the current dispute are found in a paper trail
Reuters examined that dates back to July 2008, when Telmex first
asked the government for a television license.
Senior Cofetel officials sent memos back and forth about the
Telmex license and were aware of a 60-day deadline to make a
decision, but did nothing as the regulatory clock wound down,
according to documents and former officials.
A federal court last year found Cofetel took too long to
make a ruling, which led to tacit approval for Telmex to enter a
pay television sector that generates about $2.5 billion in
revenues a year, according to an industry trade group.
Mexico's Communications and Transport Ministry (SCT), the
arbiter of telecoms disputes, quickly froze the Telmex TV
license and sent the issue to the Supreme Court for a final
Meanwhile, the comptroller's office has been investigating
whether the Telmex application process was thwarted by gross
negligence or tainted by corruption.
The agency is now preparing its final report on the conduct
of a handful of Cofetel officials, said the official from the
If the conclusions point to wrongdoing, it could open the
door to a more serious investigation from the Mexico
Telmex declined several requests for comment on whether it
would continue to push its case for a television license, even
if the comptroller decides Cofetel officials wrongly aided the
Jorge Mena, a former Cofetel official under investigation
for his handling of the Telmex bid, has lobbied for the phone
giant since he left the regulator in mid-2010, according to
several government officials. Mena declined to comment.
In the weeks before the deadline for Cofetel to hand down a
decision in 2008, staff at the regulator often urged Mena to
take some action, said one former official who asked for
Hector Osuna, the president of Cofetel at the time, said his
agency would never have approved the Telmex bid in 2008. The
company is seeking a back door to the lucrative market, he told
Reuters in August. "They are looking for a court to tell them
'You are the victim.'"
Government lawyers expect they can prevail in court because
Telmex did not fulfill other steps needed to enter the TV
market, such as paying a fee for the change of license.
"That payment could have been a million dollars or one
dollar. But it had to be something. Without that, there can be
no change in the license," said a government lawyer who declined
to be identified because he was not authorized to speak publicly
about legal strategy.
Early this month, a Telmex official said the company was not
interested in taking part in a planned-for auction to broadcast
television over the public airwaves.
The company instead is seeking permission to broadcast
television through the existing infrastructure it uses to reach