Mexico’s Telmex Unveils Plan to Enter U.S. Market

MEXICO CITY — Only days after U.S. telephone companies plunged into Mexico’s long-distance market, Mexican giant Telmex announced Wednesday that it would return the favor--entering the United States this year in an ambitious bid to lure Latino clients.

Telmex, a former government monopoly privatized in 1991, said it will undercut the going rates on phone calls between the United States and Mexico, as well as offer national long-distance service within the U.S. and a host of other services aimed at Spanish-speaking residents.

And Telmex executives--who for decades enjoyed a lucrative monopoly in Mexico--rapped the United States for having too little competition in international phone service.

“You can’t charge 15 cents [a minute] for calling coast to coast [in the United States], and charge 90 cents to call from the U.S. to Mexico,” said Carlos Slim, president of Telefonos de Mexico, or Telmex, during a lunch with foreign correspondents.

Telmex plans to form a joint venture with Sprint Corp. and use the American company’s phone lines, Slim said. The Mexican firm will provide marketing expertise and new products.

U.S.-Mexico phone traffic is the second-largest international phone business in the world, after U.S.-Canada calls.

Telmex is among the first foreign companies to go after the huge U.S. telephone market.

The Telmex announcement follows the Jan. 1 opening of Mexico’s long-distance market to competition. Consumers in the central city of Queretaro were given a chance to switch to new phone companies--two of them joint ventures with AT&T; and MCI.

To the surprise of analysts, who had predicted that consumers would punish Telmex for a history of poor service, most have chosen to stick with the Mexican firm.

Slim, said to be Mexico’s richest man with a fortune of $6 billion, bristled when asked whether Mexican Americans might reject Telmex because of its history of bad lines, grumpy operators and erratic phone bills.

He noted Telmex had invested billions of dollars to upgrade the firm’s technology and add new lines in recent years. According to the company’s market surveys, he said, Mexicans living in the U.S.--many from rural areas--see the company in a positive light.

“They didn’t have as bad an image of Telmex. It brought communications to their pueblo,” he said.

Telmex executives said they would seek a license from the U.S. Federal Communications Commission in coming weeks, and they expected to begin offering service in the U.S. this year.

Luis Lopez, the company’s director of U.S. operations, said Telmex hasn’t yet decided where it would launch the service.

“Obviously, the biggest market [of Mexican immigrants] is Los Angeles. But being big, it’s very complicated,” he said.

Executives declined to provide any figures on how many clients they expected to sign up. And they wouldn’t provide numbers on their planned investment, although they indicated that it wouldn’t be huge because they will use the Sprint network.

Telmex plans a service that will make it easier for people on the U.S. side of the border to phone the Mexican side from pay phones, Lopez said. But executives said they have much more ambitious plans, hoping to eventually enter the U.S. paging and cellular markets too.

“We’ll be very aggressive,” Slim said.