The Mexican competition authority has blocked the US$1.6bn acquisition of a 50% stake in mobile operator Iusacell by media/telecoms group Televisa.
Televisa confirmed earlier rumours that the Federal Competition Commission (CFC) had not authorised the…
The Mexican competition authority has blocked the US$1.6bn acquisition of a 50% stake in mobile operator Iusacell by media/telecoms group Televisa.
Televisa confirmed earlier rumours that the Federal Competition Commission (CFC) had not authorised the conversion of its debt in Iusacell into equity. Out of the five commissioners, three voted to block the deal.
Televisa, complained that the CFC’s decision “damages the potential for competition in a key sector for Mexico’s development”.
The TV giant said that the law provided for a number of alternatives, including an appeal.
The CFC was not immediately available for comment.
Televisa announced in April last year plans to invest US$37.5m in Iusacell’s equity and US$1.565bn of the company’s debt that is convertible into equity.
This would have left Televisa with a 50% equity stake in Iusacell, which is currently controlled by the conglomerate Grupo Salinas.
In its statement yesterday, TElevisa said that, as of Q4 2011, it had already completed the US$1.6bn investment in Iusacell.
This included the convertible debt, which has a conversion date on or before December 2015.
Televisa added that the investment had already been “put to work” by Iusacell.
The regulatory controversy over the deal has focused on the issue of competition in the TV and the telecoms market.
Opponents of the deal had claimed that the transaction could negatively affect competition in the TV market. Iusacell’s parent company, Grupo Salinas, also controls TV Azteca, a broadcast competitor of Televisa.
Yet the supporters of the deal argued that the deal would create a powerful competitor to America Movil, the telecoms group headed by Carlos Slim, in the telecoms market.
According to data from Moody’s, America Movil’s mobile subsidiary Telcel had a 70% share of the wireless market in September 2011, while its fixed-line subsidiary Telmex holds 80% of the country’s fixed-lines and 70% of broadband accesses.
In a report published this week, the OCDE concluded that Mexico’s fixed-line, mobile and broadband markets are currently characterised by a “low degree of competition”.
The international body also reported that the price of telecoms services in the country were much higher than the tariffs for equivalent services in almost all other OCDE countries, while penetration rates are among the lowest in the OCDE.
According to a Bloomberg report, Carlos Slim criticised the OCDE report, particularly its use of certain figures.
