As Mexican regulators consider whether to approve the US$1.6bn acquisition of a 50% stake in mobile operator Iusacell by TV giant Grupo Televisa, a heated debate has arisen over whether or not the deal should be approved.
The country’s competition…
As Mexican regulators consider whether to approve the US$1.6bn acquisition of a 50% stake in mobile operator Iusacell by TV giant Grupo Televisa, a heated debate has arisen over whether or not the deal should be approved.
The country’s competition commission (CFC) is set to discuss the deal today. TelecomFinance understands that the result – unconditional or conditional clearance, or possibly a prohibition of the entire transaction – will be known once the companies have been notified. Notification could come by the end of this week.
The agreement for the acquisition of the stake in Iusacell, which is part of the Grupo Salinas conglomerate, was originally announced in April. The deal would see Televisa making an investment of US$37.5m in Iusacell’s equity and US$1.565bn in Iusacell’s debt that is convertible into equity. If the deal were to be completed, Televisa would hold a 50% stake in Iusacell.
But the deal has become surrounded by controversy, partly due to the fact that Grupo Salinas also controls the TV broadcaster TV Azteca, a competitor of Televisa in the TV market.
On Sunday, the Mexican Association for the Right to Information (AMEDI) called on the committee members of the CFC to block the deal.
AMEDI said that allowing Televisa and TV Azteca to share the ownership of Iusacell would constitute “a threat to competition policy in the Mexican state”.
The association added that CFC must prohibit the deal because, if it is not stopped, it could lead to anti-competitive, monopolistic practices.
On Sunday, Bloomberg reported that two of Televisa’s competitors – America Movil and NII Holdings – had claimed last year that Televisa may have already effectively taken control of Iusacell.
The report stated that America Movil and NII Holdings had claimed that Televisa had gained representation in two of Iusacell’s four board seats and had chosen a new CFO, despite the fact that the deal was yet to be approved.
The America Movil complaint was reportedly dismissed in December, while NII Holding’s withdrew its own complaint.
In another twist to the story, reported by local newspaper El Economista, Iusacell had recently threatened to file complaints before three public bodies, including the CFC, for having published confidential information about a regulatory record.
The complaints had reportedly sought to prevent CFC head Eduardo Perez Motta from participating in the CFC’s session to discuss the Iusacell-Televisa deal.
But on Friday the head of Grupo Salinas, Ricardo Salinas, said that all legal actions had been cancelled.
If the deal were to be completed, it could also potentially mean that Grupo Televisa would be able to offer a quadruple-play (fixed, mobile, TV and internet) services to customers.
Televisa already has a strong presence in the Mexican television market, but has also expanded into the telecoms sector through its subsidiaries, such as fixed-line operator Bestel.
Meanwhile, the subsidiaries of telecoms giant America Movil have so far been denied from entering the Mexican TV market. Its subsidiaries Telcel and Telmex dominate the mobile and fixed markets in the country.
In a research note last week, Deutsche Bank analysts commented that the CFC’s focus would be to ensure that the transaction did not impact competition in the media sector.
The Deutsche Bank analysts argued that the CFC “does not see much of an issue on the telecommunications end”.
