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Puerto Vallarta News NetworkMexico & Banderas Bay Area News 

Telefonica Suing Mexico for $1 Billion
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June 29, 2012

Telefonica said it had suffered revenue losses of $1 Billion over the period of 2006 to 2011 due to a unilateral reduction by Mexico of the fee that telephone operators charge one another to connect calls.

Mexico City, Mexico - Spanish telephone giant Telefonica, which recently announced plans to invest roughly $500 million in Mexico this year, has made known its intention to take Mexico to international arbitration for $1 billion in lost revenue due to regulatory changes.

The company said it had suffered the lost revenue over the period of 2006 to 2011 due to a unilateral reduction by Mexico of the fee that telephone operators charge one another to connect calls. That violates an investment treaty between Mexico and Spain, according to an initial notice sent to Mexico's economy ministry.

According to a Telefonica spokesman, the company, whose Movistar Mexico unit is a distant second in Mexico's cell phone market, behind billionaire Carlos Slim's dominant America Movil, has filed a case with the International Center for Settlement of Investment Disputes, a body affiliated with the World Bank that helps resolve disputes between companies and governments.

"We hope that a solution will be found quickly," the spokesman said, adding that recent court decisions in Mexico on the interconnection fee had been favorable to the company.

Telefonica first notified Mexico's economy ministry of its intent to seek arbitration in September 2011.

Source: Reuters