UPDATE: America Movil's Telcel To Cut Interconnection Rates

Mexico's largest mobile-phone operator Telcel, a unit of phone giant America Movil SAB (AMX, AMX.MX), said Thursday it has reached an agreement with a number of fixed-line and mobile carriers to reduce the amount it charges to complete incoming calls on its network, with further reductions planned through 2014.

Telcel said in a press release that under the agreement with NII Holdings Inc.'s (NIHD) Nextel unit, its own fixed-line unit Telefonos de Mexico SAB (TMX, TELMEX.MX), and fixed-line operator Marcatel, it will charge 39 Mexican cents, or about 3 U.S. cents, per minute in 2011, lowering that gradually to just under 31 Mexican cents in 2014.

The agreement also includes billing calls by the second instead of rounding up to the next minute, which leads to an effective average reduction of about 22% a year, the company said. With the elimination of rounding, the effective mobile termination rates will fall from 30 Mexican cents in 2011 to 24 Mexican cents in 2014, Telcel added.

The rate for 2011 is the same one that telecommunications regulator Cofetel imposed earlier this year, the application of which was enforced by a Supreme Court ruling. That decision had slashed the rate from the 95 Mexican cents that Telcel had been charging.

"The interconnection rates agreed on are the lowest among members of the OECD [Organization of Economic Cooperation and Development] and are among the lowest in the world," Telcel said. The company added that the agreed rates will be extended to all fixed and mobile operators that terminate calls on its network.

Cofetel President Mony de Swaan, in messages sent via his Twitter account, welcomed the agreement, which he said is in line with best practices, reduces litigation in the sector, "and most importantly transfers the benefits to users."

Nextel Mexico, which has been a vocal supporter of lower interconnection rates, called the agreement a "clear demonstration" of the companies' commitment to establishing healthy competition and certainty in the industry.

Telcel, which had 68 million mobile subscribers at the end of September, is Mexico's largest wireless service provider with about a 70% market share by subscribers.

-By Anthony Harrup, Dow Jones Newswires; (5255) 5980-5176; anthony.harrup@dowjones.com

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