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Before the
Federal Communications Commission
Washington, D.C. 20554
)
)
In the Matter of )
America Movil, S.A.B. de C.V. ) File No. EB-11-IH-0216
Parent of Puerto Rico Telephone ) NAL/Acct. No. 201132080032
Company, Inc.
) FRN No. 0015025067
Apparent Liability for Forfeiture
)
)
)
NOTICE OF APPARENT LIABILITY FOR FORFEITURE
Adopted: June 22, 2011 Released: June 22, 2011
By the Chief, Enforcement Bureau:
I. INTRODUCTION
1. In this Notice of Apparent Liability for Forfeiture ("NAL"), we find
that America Movil, S.A.B. de C.V. ("America Movil"), the parent
company of Puerto Rico Telephone Company, Inc. ("PRTC"), a common
carrier radio licensee, apparently violated section 310(b)(4) of the
Communications Act of 1934, as amended (the "Act"), and the terms of a
Commission order by willfully issuing additional equity stock that
resulted in additional indirect foreign ownership in PRTC beyond the
percentage permitted by section 310(b)(4) and the Commission's 2007
MO&O and Declaratory Ruling. Based on our review of the undisputed
facts in this matter, and for the reasons discussed below, we find
that America Movil is apparently liable for a forfeiture of $16,000.
II. BACKGROUND
2. Section 310(b)(4) of the Act establishes a 25 percent limit for
investment by foreign individuals, corporations, and governments in
entities that control U.S. common carrier radio licensees. This
section also grants the Commission discretion to allow higher levels
of foreign ownership if it determines that such ownership is not
inconsistent with the public interest. A licensee must file a petition
for declaratory ruling to obtain Commission approval before direct or
indirect foreign ownership of its U.S. parent company exceeds the 25
percent limit. In addition, a licensee that has already received
Commission approval to exceed the 25 percent benchmark up to a certain
level of foreign ownership must seek further Commission approval
before it may increase its foreign ownership above that level.
3. PRTC holds various common carrier radio licenses and provides wireless
telecommunications service in Puerto Rico. PRTC is a wholly-owned
subsidiary of America Movil, a publicly-traded corporation organized
and headquartered in Mexico that provides wireless telecommunications
services in Latin America through various operating subsidiaries.
4. In the 2007 MO&O and Declaratory Ruling, the Commission approved the
transfer of control of licenses and authorizations held by
Telecomunicaciones de Puerto Rico, Inc. ("TELPRI"), through its
wholly-owned subsidiary PRTC, from Verizon Communications, Inc.
("Verizon") to America Movil. The Commission also granted America
Movil's petition for declaratory ruling permitting indirect foreign
ownership in PRTC in excess of the 25 percent limit set forth in
section 310(b)(4) of the Act. Specifically, the Commission authorized
the indirect foreign ownership in PRTC by Mr. Carlos Slim Helu and
members of his immediate family (collectively, the "Slim Family"). At
that time, the Slim Family had a 32.33 percent equity and 66.21
percent voting interest in America Movil. As a condition of its grant
of the transfer of control and petition for declaratory ruling, the
Commission required America Movil to obtain prior Commission approval,
pursuant to section 310(b)(4), "before the company goes private, or
otherwise issues or causes to be issued, directly or indirectly,
without limitation, as a result of any share purchase, redemption, or
other recapitalization, securities that would represent more than 5
percent of its equity or voting interests (whether full or limited
voting interests)." In addition, the Commission required that the
equity and/or voting interests held directly or indirectly in America
Movil by the Slim Family not exceed, without prior Commission
approval, an aggregate three percent above the levels they held at
that time.
5. On June 23, 2010, America Movil submitted an updated Petition for
Declaratory Ruling requesting that the Commission find the proposed
foreign ownership structure of America Movil in excess of the 25
percent benchmark set forth in section 310(b)(4) is in the public
interest. In the petition, America Movil acknowledged that on June 16,
2010, it issued additional stock that increased the Slim Family's
equity holdings in America Movil from 32.4 percent to 40.18 percent.
The Slim Family's voting interest in America Movil was unchanged.
America Movil explained that, "[d]ue to an oversight, which America
Movil regrets, America Movil inadvertently did not seek Commission
approval prior to the issuance" of the stock. America Movil also
stated that, as the parent of PRTC, it takes its obligations under the
FCC's rules and the 2007 MO&O and Declaratory Ruling very seriously
and has put into place internal measures to ensure that such an
oversight does not reoccur.
6. On February 7, 2011, the International Bureau granted America Movil's
petition for declaratory ruling to permit the Slim Family to hold a
40.18 percent indirect equity interest in PRTC. The International
Bureau granted the petition "without prejudice to any enforcement
action by the Commission for non-compliance with the Communications
Act of 1934, as amended, or the Commission's rules." The International
Bureau subsequently referred the matter to the Enforcement Bureau for
possible enforcement action.
III. DISCUSSION
7. Under section 503(b)(1) of the Act, any person who is determined by
the Commission to have willfully or repeatedly failed to comply with
any provision of the Act or any rule, regulation, or order issued by
the Commission shall be liable to the United States for a forfeiture
penalty. Section 312(f)(1) of the Act defines willful as "the
conscious and deliberate commission or omission of [any] act,
irrespective of any intent to violate" the law. The legislative
history to section 312(f)(1) of the Act clarifies that this definition
of willful applies to both sections 312 and 503(b) of the Act, and the
Commission has so interpreted the term in the section 503(b) context.
To impose a forfeiture penalty, the Commission must issue a notice of
apparent liability, and the person against whom the notice has been
issued must have an opportunity to show, in writing, why no such
forfeiture penalty should be imposed. The Commission will then issue a
forfeiture if it finds, based on the evidence, that the person has
violated the Act, a rule, or a Commission order. As set forth below,
we conclude that America Movil is apparently liable for forfeiture for
its apparent willful violation of section 310(b)(4) of the Act and the
2007 MO&O and Declaratory Ruling.
8. Section 310(b)(4) of the Act establishes a 25 percent limit for
investment by foreign individuals, corporations, and governments in
entities that control U.S. common carrier radio licensees and requires
prior Commission approval for foreign ownership in excess of that
level. The 2007 MO&O and Declaratory Ruling authorized indirect
foreign ownership by the Slim Family in PRTC but explicitly required
America Movil to obtain prior Commission approval "before the company
goes private, or otherwise issues or causes to be issued, directly or
indirectly, without limitation, as a result of any share purchase,
redemption, or other recapitalization, securities that would represent
more than 5 percent of its equity or voting interests (whether full or
limited voting interests)." The 2007 MO&O and Declaratory Ruling also
required that the equity and/or voting interests held directly or
indirectly in America Movil by the Slim Family not exceed, without
prior Commission approval, an aggregate three percent above the levels
they held at that time.
9. The undisputed facts in this case show that on June 16, 2010, America
Movil deliberately issued additional stock that represented more than
5 percent of its equity interest and increased the Slim Family's
equity holdings in America Movil from 32.4 percent to 40.18 percent
prior to obtaining Commission approval. Accordingly, we conclude that
America Movil apparently willfully violated section 310(b)(4) of the
Act and the 2007 MO&O and Declaratory Ruling.
10. The Commission's Forfeiture Policy Statement and implementing rules
prescribe a base forfeiture of $8,000 for violations of the alien
ownership restrictions. America Movil is therefore apparently liable
for a base forfeiture of $8,000 for its willful violation of section
310(b)(4) of the Act and the 2007 MO&O and Declaratory Ruling. The
Commission's rules provide, however, that base forfeitures may be
adjusted based upon consideration of the factors enumerated in Section
503(b)(2)(E) of the Act and Section 1.80(a)(4) of the Commission's
rules, which include "the nature, circumstances, extent, and gravity
of the violation ... and the degree of culpability, any history of
prior offenses, ability to pay, and such other matters as justice may
require." We conclude that America Movil's ability to pay warrants an
upward adjustment of the base forfeiture amount. To ensure that a
proposed forfeiture is a deterrent, and not simply a cost of doing
business, the Commission has determined that large or
highly-profitable companies, such as America Movil, may be subject to
proposed forfeitures that are higher than the base forfeiture amount.
Given America Movil's size and its ability to pay a forfeiture, we
conclude that an upward adjustment of the base forfeiture amount from
$8,000 to $16,000 is appropriate.
11. While America Movil claimed that the violation was a result of an
inadvertent oversight, it is well established that administrative
oversight or inadvertence is not a mitigating factor warranting a
downward adjustment of a forfeiture. Moreover, America Movil's
assertion that it has put into place internal measures to ensure that
such an oversight does not reoccur, while laudable, does not mitigate
its liability for the instant violation. Accordingly, we find that
America Movil is apparently liable for a total forfeiture of $16,000
for its willful violation of section 310(b)(4) of the Act and the 2007
MO&O and Declaratory Ruling.
IV. ORDERING CLAUSES
12. ACCORDINGLY, IT IS ORDERED that, pursuant to section 503(b) of the
Act, and section 1.80 of the Commission's rules, that America Movil,
S.A.B. de C.V. is hereby NOTIFIED of its APPARENT LIABILITY FOR A
FORFEITURE in the amount of $16,000 for willfully violating section
310(b)(4) of the Act and the 2007 MO&O and Declaratory Ruling.
13. IT IS FURTHER ORDERED that, pursuant to section 1.80 of the
Commission's rules, within thirty days of the release date of this
Notice of Apparent Liability for Forfeiture, America Movil, S.A.B. de
C.V. SHALL PAY the full amount of the proposed forfeiture or SHALL
FILE a written statement seeking reduction or cancellation of the
proposed forfeiture.
14. Payment of the forfeiture must be made by check or similar instrument,
payable to the order of the Federal Communications Commission. The
payment must include the NAL/Acct. No. and FRN referenced above.
Payment by check or money order may be mailed to Federal
Communications Commission, P.O. Box 979088, St. Louis, MO 63197-9000.
Payment by overnight mail may be sent to U.S. Bank - Government
Lockbox #979088, SL-MO-C2-GL, 1005 Convention Plaza, St. Louis, MO
63101. Payments by wire transfer may be made to ABA Number 021030004,
receiving bank Federal Reserve Bank of New York, and account number
27000001. For payment by credit card, an FCC Form 159 (Remittance
Advice) must be submitted. When completing the FCC Form 159, enter the
NAL/Account number in block number 23A (call sign/other ID), and enter
the letters "FORF" in block number 24A (payment type code). America
Movil, S.A.B. de C.V. will also send electronic notification within
forty-eight (48) hours of the date said payment is made to
Terry.Cavanaugh@fcc.gov and Kathy.Berthot@fcc.gov.
15. The written statement seeking reduction or cancellation of the
proposed forfeitures, if any, must include a detailed factual
statement supported by appropriate documentation and affidavits
pursuant to sections 1.80(f)(3) and 1.16 of the Commission's rules.
The written statement must be mailed to Theresa Z. Cavanaugh, Acting
Chief, Investigations and Hearings Division, Enforcement Bureau,
Federal Communications Commission, 445 12th Street, S.W., Room 4-C330,
Washington, D.C. 20554 and must include the NAL/Acct. No. referenced
above. The written statement should also be emailed to Terry Cavanaugh
at Terry.Cavanaugh@fcc.gov and Kathy Berthot at Kathy.Berthot@fcc.gov.
16. The Commission will not consider reducing or canceling a forfeiture in
response to a claim of inability to pay unless the petitioner submits:
(1) federal tax returns for the most recent three-year period; (2)
financial statements prepared according to generally accepted
accounting practices (GAAP); or (3) some other reliable and objective
documentation that accurately reflects the petitioner's current
financial status. Any claim of inability to pay must specifically
identify the basis for the claim by reference to the financial
documentation submitted.
17. Requests for payment of the full amount of this Notice of Apparent
Liability for Forfeiture under an installment plan should be sent to:
Chief Financial Officer -- Financial Operations, Federal
Communications Commission, 445 12th Street, S.W., Room 1-A625,
Washington, D.C. 20554. For answers to questions regarding payment
procedures, please contact the Financial Operations Group Help Desk at
1-877-480-3201 or Email: ARINQUIRIES@fcc.gov.
18. IT IS FURTHER ORDERED that a copy of this Notice of Apparent Liability
for Forfeiture shall be sent by certified mail, return receipt
requested, to counsel for America Movil, S.A.B. de C.V., Michael G.
Jones, Esq., Wilkie Farr & Gallagher LLP, 1875 K St, NW, Washington
D.C. 20006-1238.
FEDERAL COMMUNICATIONS COMMISSION
P. Michele Ellison
Chief, Enforcement Bureau
47 U.S.C. S: 310(b)(4).
In the Matter of Verizon Communications, Inc., Transferor, and America
Movil, S.A.B. de C.V., Transferee, Memorandum Opinion and Order and
Declaratory Ruling, 22 FCC Rcd 6195 (2007) ("2007 MO&O and Declaratory
Ruling").
47 U.S.C. S: 310(b)(4).
Id.; see also Foreign Ownership Guidelines for FCC Common Carrier and
Aeronautical Radio Licenses, 19 FCC Rcd 22612, 22621 (Int'l Bur. 2004)
("Foreign Ownership Guidelines").
Id. at 22639.
Id.
2007 MO&O and Declaratory Ruling, 22 FCC Rcd at 6196-97, P: 2.
Id. at 6198, P: 7.
Id. at 6227, P: 73. At the time of this transaction, TELPRI was owned by
Verizon and certain other shareholders, but was controlled by Verizon. Id.
at 6196, P: 2. Both TELPRI and its wholly-owned subsidiary PRTC are
organized under the laws of the Commonwealth of Puerto Rico. TELPRI is
wholly owned by Tenedora Telpri, S.A. de C.V. ("Tenedora"), which in turn
is 99.99 percent owned and controlled by Radiomovil Dipsa, S.A. de C.V.
("Telcel"), and is 0.01 percent owned by Amov IV, S.A. de C.V. ("Amov
IV"). Telcel is 99.99 percent owned and controlled by Sercotel, S.A. de
C.V. ("Sercotel"), and is 0.01 percent owned by Amov IV. Sercotel is 99.99
percent owned and controlled by America Movil, and is 0.01 percent owned
by Amov IV. Amov IV is 99.99 percent owned and controlled by Sercotel and
is 0.01 percent owned by Telcel. Tenedora, Telcel, Amov IV and Sercotel
are all organized under the laws of Mexico. See International
Authorizations Granted, Public Notice, DA 11-259 (Int'l Bur. 2011) ("2011
Public Notice").
Id. at 6225, P: 68.
Id. at 6219, P: 53.
Id. at 6219-20, P:P: 54-56.
Id. at 6224, P: 65.
Id. at 6225, P: 68.
America Movil, S.A.B. de C.V., Petition for Declaratory Ruling, filed June
23, 2010 ("2010 Petition"). The International Bureau placed America
Movil's Petition for Declaratory Ruling on public notice as acceptable for
filing on August 5, 2010. See Non-Streamlined International
Applications/Petitions Accepted for Filing, Public Notice, Report No.
TEL-01445NS (Int'l Bur. Aug. 5, 2010).
2010 Petition at 3-4. Specifically, America Movil stated that in
connection with two separate but concurrent tender offers commenced by
America Movil to acquire outstanding shares of Telmex Internacional,
S.A.B. de C.V. ("Telmex Internacional") and Carso Global Telecom, S.A.B.
de C.V. ("Carso Global"), (collectively, the "Telmex Entities"), it issued
an amount of Class L shares equal to 42.21 percent of the Class L shares
outstanding before issuance, which represents 26.28 percent of the total
equity of America Movil before the issuance. The acquisition of the Telmex
Entities was structured as a tender offer by America Movil for the
outstanding shares of the Telmex Entities, in exchange for which (i)
tendering shareholders of Telmex Internacional would receive cash or Class
L shares of America Movil, at the option of the tendering shareholder; and
(ii) tendering shareholders of Carso Global would receive Class L shares
of America Movil. The period to participate in the tender offers expired
on June 10, 2010, and 92.08 percent of the acceptances were tendered on
that day. Therefore, America Movil stated, only as of June 11, 2010 did it
know the number of Class L shares that it would be required to issue in
response to the tender offers. As a result of the issuance of the Class L
shares, the Slim Family's equity holdings in America Movil increased from
32.4 percent immediately prior to the issuance to 40.18 percent. Id.
Id. at 4.
Id. America Movil initially requested that the Commission grant its
petition for declaratory ruling nunc pro tunc. Id. On June 25, 2010,
America Movil supplemented its petition for declaratory ruling to withdraw
its request that the Commission grant the petition nunc pro tunc. America
Movil, S.A.B. de C.V., Supplement to Petition for Declaratory Ruling,
filed June 25, 2010.
2010 Petition at 4.
See 2011 Public Notice.
Id.
47 U.S.C. S: 503(b)(1)(B); 47 C.F.R. S: 1.80(a)(1).
47 U.S.C. S: 312(f)(1).
H.R. Rep. No. 97-765, 97th Cong. 2d Sess. 51 (1982).
See, e.g., Southern California Broadcasting Co., Memorandum Opinion and
Order, 6 FCC Rcd 4387, 4388, P: 5 (1991) ("Southern California
Broadcasting").
47 U.S.C. S: 503(b); 47 C.F.R. S: 1.80(f).
See, e.g., SBC Communications, Inc., Forfeiture Order, 17 FCC Rcd 7589,
7591, P: 4 (2002).
47 U.S.C. S: 310(b)(4); 2007 MO&O and Declaratory Ruling, 22 FCC Rcd at
6196.
47 U.S.C. S: 310(b)(4).
Id. at 6224, P: 65.
Id. at 6225, P: 68.
See supra para. 5.
Forfeiture Policy Statement, 12 FCC Rcd 17087, 17113 (1997); 47 C.F.R. S:
1.80(b)(4), Note to Paragraph (b)(4): Section I. Base Amounts for Section
503 Forfeitures.
See e.g., Satamatics, Inc., Notice of Apparent Liability for Forfeiture,
22 FCC Rcd 21011, 21015, P: 11 (Enf. Bur., Investigations and Hearings
Div., 2007) (proposing an $8,000 forfeiture for violation of alien
ownership restrictions).
See 47 U.S.C. S: 503(b)(2)(E).
47 C.F.R. S: 1.80(a)(4).
America Movil's Annual Report for 2010 indicates that the company had
total revenues of approximately 607.8 billion Mexican pesos (approximately
$48.1 billion U.S. dollars) and net income of approximately 98.9 billion
Mexican pesos (approximately $7.8 billion U.S. dollars). See America
Movil, S.A.B. de C.V. 2010 Annual Report, SEC Form 20-F, at
http://www.sec.gov/Archives/edgar/data/1129137/000119312511138519/d20f.htm.
See Forfeiture Policy Statement, 12 FCC Rcd at 17099-100, P: 24.
2010 Petition at 4.
See Southern California Broadcasting, 6 FCC Rcd at 4387, P: 3 (stating
that "inadvertence ... is at best, ignorance of the law, which the
Commission does not consider a mitigating circumstance").
47 U.S.C. S: 503(b).
47 C.F.R. S: 1.80.
See 47 C.F.R. S:S: 1.80(f)(3), 1.16.
See 47 C.F.R. S: 1.1914.
Federal Communications Commission DA 11-1093
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Federal Communications Commission DA 11-1093