On 13 November 2018, the Federal Institute of Telecommunications ("IFT") issued in the Federal Official Gazette, the resolution through which the Plenary of the IFT established the minimum technical conditions for the interconnection between concessionaires that operate public telecommunication networks and also determined the interconnection rates resulting from the methodology for the calculation of interconnection costs that will be in force from 1 January to 31 December 2019.

The purpose of the resolution is to establish the applicable rates to call termination service in fixed telephony networks in the case of the Preponderant Economic Agent in the telecommunications sector, i.e. Radiomóvil Dipsa, S.A. de C.V. ("Telcel") in accordance with the judgment issued in the Court case (Amparo en Revisión) 1100/2015 by the Second Chamber of Mexico’s Supreme Court on 16 August 2017, against the ruling issued by the Second District Judge In Administrative Matters Specialized in Economic Competition, Broadcasting and Telecommunications, with residence in Mexico City and Jurisdiction in the country, dated 18 February 2015, in the indirect Court case trial 204/2014, following the methodology of costs issued by the IFT and oriented to the costs of the rates according to the precept established in the Federal Telecommunications and Broadcasting Law in the sense of promoting the development of effective competition.

In this ruling, the Supreme Court decided to declare unconstitutional the normative system consisting of subparagraph a) of the second and third paragraph of article 131 of the Federal Telecommunications and Broadcasting Law, as well as the Transitory Articles Sixth, Twentieth and Thirty-fifth, in those normative portions in which the object or effect of applying the regime of free or zero rate to the preponderant economic agent.

In order to safeguard legality in the telecommunications sector and preserve the interconnection agreements or contracts executed between Telcel and the different concessionaires, and in order not to affect the final users, the rates determined by the IFT will come into force as of 1 January 2018 and shall be published in the Federal Official Gazette in the terms stated on article 137 of the Federal Telecommunications and Broadcasting Law.

This means, that cost models of switched and non-switched services for the interconnection rates of such services are used. Such fees will be applied and calculated based on the actual duration of the calls, without rounding up to the full minute, adding the duration of all completed calls, in the corresponding billing period, measured in seconds, and multiplying the minutes equivalent to such amount, for the corresponding rate.

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