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Mexico lower house gives final approval for telecoms bill

By Dave Graham and Miguel Gutierrez

MEXICO CITY (Reuters) - Mexico's lower house of Congress gave final approval to a major telecommunications bill early Friday morning, a reform that threatens to loosen tycoon Carlos Slim's grip on the phone market and broadcaster Televisa's dominance of the airwaves.

Following more than 14 hours of at times heated debate, lawmakers sent the amended bill to the Mexican Senate for its consideration.

While the proposal has dampened confidence in Slim's business prospects, investors are hopeful the Mexican tycoon can at least partly offset curbs to his phone empire by entering the television market.

Late Thursday night, lawmakers gave general approval to the bill by a vote of 414 in favor, 50 opposed and 8 abstentions.

Presented by the government on March 11, the reform aims to boost competition in the telecoms sector by increasing foreign investment and giving regulators the power to force companies with a market share above 50 percent to sell assets.

"In our country there is just one territory and it is not the territory or property of any one telephone company," said Julio Cesar Moreno, a congressman and member of the leftist Party of the Democratic Revolution, or PRD, during the debate.

"Neither can we continue being held hostage to monopolists," he added.

Slim, the world's richest man, controls about 70 percent of the Mexican mobile phone market and roughly 80 percent of the fixed-line business through his phone company America Movil.

Shares of America Movil gained 4.3 percent on the Mexican stock exchange on Thursday, hours before the lower house of Congress gave its general approval to the reform.

Televisa has about 60 percent of the broadcast market, and shares of the broadcaster fell 1.5 percent on Thursday prior to the vote.

The reform has been hailed as the biggest planned shake-up in decades of the telecoms industry, which critics of Mexico's economy view as a microcosm of the excessive control wielded by a small group of people over key sectors.

Lawmakers in President Enrique Pena Nieto's ruling Institutional Revolutionary Party, or PRI, have said they are confident the historic bill will pass Congress before the current session ends at the end of April.

Though Pena Nieto thrashed out the proposal with the leaders of the main opposition parties, a number of disputed points must still be resolved before the same bill can pass both chambers of Congress.

In the lower house, PRI lawmakers sought to amend the bill to ensure that Mexico follows a reciprocal approach to opening up its market to foreign investment. That approach would ensure that the size of holdings foreign firms can take in Mexico will not be allowed to exceed the share Mexican firms can hold in that country's market.

As originally set out, the Mexican reform removes restrictions on foreign ownership in telecommunications, eliminating current limits on fixed-line assets.

The bill also envisages allowing foreign investors to take up to 49 percent ownership of TV or radio broadcasters, pending a review by a foreign investment commission. Some major economies do not allow foreign firms such a large holding.

Some opposition lawmakers have also voiced strong opposition to elements of the bill such as a provision that the president be consulted on telecommunications concessions. A separate provision of the bill pledges to create a new independent regulator for the industry.

Shares in America Movil have been hit by the planned reform, falling more than 6 percent since the proposal was introduced at the beginning of last week.

Televisa's stock has also taken a knock, falling 5.6 percent since the reform proposal was first proposed.

Earlier on Thursday, America Movil said it has obtained the exclusive broadcast rights in Latin America, except Brazil, for the 2014 winter Olympic games as well as the 2016 summer Olympic games.

The announcement boosted some market bets that the company stands to gain more by entrance into the paid TV sector - from which it has been barred by Mexican regulators - than it stands to lose by ceding share of the telephone and internet markets.

(Additional reporting by David Alire Garcia; Editing by Jackie Frank, Lisa Shumaker and W Simon)

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