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Mexican ruling hits broadcast spectrum recovery plan

MEXICO CITY (Reuters) - Mexico's Supreme Court on Wednesday upheld an appeal by a company fighting to keep a chunk of lucrative broadcast spectrum that the government hopes to use to spur more competition in the country's closed telecommunications market.

The decision is a blow to Mexico's new government which is trying to shake up a telecom sector where regulatory efforts have long been stymied by court battles from entrenched players such as the world's richest man, Carlos Slim.

The government last year said it wanted to reclaim 68 licenses for the 2.5 gigahertz (GHz) band, of which media firm MVS Comunicaciones holds 42. To avoid having to return the spectrum, the company sought and was granted a court injunction.

A spokesman for the Supreme Court said it upheld the appeal against the bid to recover the 190 megahertz (MHz) that MVS controls of the 2.5 GHz band, which is ideal for servicing data-hungry devices such as tablets and smartphones.

The government decided to take back the spectrum after MVS and other companies failed to use it to develop high-speed networks, and was planning to resell it.

Analysts have estimated that the 190 MHz would be enough to service three companies roughly the size of Carlos Slim's America Movil, Mexico's top phone company.

President Enrique Pena Nieto presented a bill last month that aims to foment competition in the industry by allowing more foreign investment and by giving regulators the power to force dominant players in the market to sell assets.

His plan identified the 2.5 GHz band as a central part of a drive to improve the high speed data network. America Movil dominates the phone sector with about 70 percent of the mobile business and 80 percent of the fixed line market.

MVS called the decision "a precedent which undoubtedly will provide greater security and judicial certainty for investment and development of Mexico's Telecomunication sector." The firm said it was open to a continued dialogue with the government about optimizing spectrum use.

A spokesman for Mexico's Communications and Transport Ministry declined to comment.

The new telecoms bill passed the lower house of Congress last month and is due to be voted in the Senate this week.

(Reporting by Elinor Comlay, Dave Graham and Adriana Barrera, with additional reporting by Tomas Sarmiento; editing by Sofina Mirza-Reid and Bob Burgdorfer)

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