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INTERVIEW-Telefonica Mexico to focus on competing with Slim in mobile

MEXICO CITY, June 3 (Reuters) - The Mexican unit of Spain's Telefonica said on Tuesday it will focus on expanding its mobile business rather than adding new services as it tries to capitalize on a regulatory overhaul and steal market share from telecoms tycoon Carlos Slim.

Mexico is in the midst of a major shake-up of its telecommunications sector, dominated by Slim, whose closest competitor in the mobile market is Telefonica.

The new rules create a so-called universal concession, which will allow companies to offer triple and quadruple play services to customers in mobile, fixed-line, Internet and TV.

Francisco Gil Diaz, Telefonica's chairman for Mexico and Central America, said cell phone users were the priority.

"For now we're more interested in deepening our presence in the mobile market," he told Reuters in an interview. "We aren't seeing television as part of our service offering."

Telefonica already offers Pay TV in Spain, Brazil, Chile and other South American countries. In May, it announced it would buy a majority stake in Spanish Pay TV operator Distribuidora de Television Digital, also known as Canal+.

Since entering Mexico at the start of the millennium, Telefonica has battled Slim's America Movil while struggling to convince regulators to level the playing field.

America Movil has around 80 percent of the fixed-line business and 70 percent of the mobile market. It is also the dominant provider of Internet services.

Last year's reform aims to change that, but Congress must still pass a raft of rules and regulations to implement the changes known as secondary laws. They, however, have been held up in the legislature, complicating efforts to rein in Slim.

Gil said he had seen few changes since the country's new regulator, the Federal Telecommunications Institute, declared America Movil "dominant" in March, forcing it to share its network, some information and lower its interconnection rates.

"Right now we're still not even getting access that we supposedly should have to the network," he said.

Telefonica had 19.3 million mobile subscribers in Mexico at the end of March, giving it roughly a 19 percent market share.

Gil said the company plans to maintain its current investment plan once the secondary laws are approved.

In the first quarter of this year, Telefonica invested around 39 million euros ($53.12 million) in Mexico. ($1 = 0.7342 Euros)

(Editing by Dave Graham and Dan Grebler)

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