Telmex to Put Rural Lines Into Separate Company

Teléfonos de México, the country’s dominant fixed-line phone carrier, plans to carve out its rural lines into a separate company, adding a new layer to a dispute between the company and its competitors. The new company, called Telmex Social, would serve 46 percent of the country where there is no competition, although it would account for only 12 percent of the parent company’s 15.5 million lines. Those lines operate with small profits or losses, the company said. Telmex, as the parent company is known, has long argued that it has carried out a social responsibility by serving Mexico’s poor and rural areas while its competitors have scooped up profitable business lines in big cities. But Telmex’s social commitment is not by choice. Under its concession, first as a monopoly and then as a dominant fixed-line company, Telmex has been required to provide service throughout Mexico. That condition was reflected in its sale price when it was privatized 20 years ago and in the fees it has charged competitors to complete calls on its network since then, analysts say.