Telmex Raises Wages 4.4%, Bemoans Lack Of TV Permit

Mexico's biggest fixed-line phone company Telefonos de Mexico SAB (TMX, TELMEX.MX) said Monday it reached agreement with the Mexican telephone workers' union to raise wages by 4.4%.

The company, which is 59% owned by America Movil (AMX.MX, AMX), cited its chief executive, Hector Slim Seade, as saying the negotiations were carried out amid an "especially critical" situation for the national telecommunications industry.

Slim Seade referred to Telmex's inability to offer television service, since it's waiting for authorization from the government while cable companies are already offering bundled television, Internet and phone packages.

Mexico suffers a "lack of an inclusive convergence so that everyone can offer all the services that technology allows," Slim Seade added.

America Movil, controlled by billionaire Carlos Slim, is embroiled in a series of disputes with the country's main TV broadcasters, Grupo Televisa SAB (TV, TLEVISA.MX) and TV Azteca SAB (AZTECA.MX), as well as smaller phone operators, over mobile interconnection rates.

Rivals have charged that Telmex's billing and marketing agreement with satellite television provider Dish Mexico goes beyond what is authorized by antitrust authorities. They also charge that America Movil's rates for completing calls on its network prohibit them from competing on final rates to users.

Slim's companies have countered with charges that Televisa, TV Azteca and others manipulate the TV market to push advertising rates up, and responds to criticism over phone rates with similar arguments about current pay-TV charges. Each side rejects the other's charges.

In the latest development in the battle over the communications and television industries, America Movil said last Friday that its local mobile unit, Telcel, has been fined $1 billion by the Federal Competition Commission, or CFC, for alleged anticompetitive practices, following an investigation started in late 2006 over termination of calls on its network.

The company said it aims to use all available means of defense, without giving further details. The CFC didn't respond Monday to a request for comment.

Telcel is Mexico's largest mobile phone operator with about 70% of the mobile subscribers. Other mobile operators are Spain's Telefonica SA (TEF), NII Holdings Inc. (NIHD) unit Nextel Mexico, and privately held Grupo Iusacell, in which Televisa has invested $1.6 billion with plans to take a 50% stake. Iusacell is currently owned by TV Azteca's controlling shareholder, Ricardo Salinas Pliego.

-By Anthony Harrup, Dow Jones Newswires; (5255) 5890 5176; anthony.harrup@dowjones.com

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