Televisa-Nextel Bid Postponed - Analyst Blog

Recently Mexico’s wireless regulator Comision Federal de Telecomunicaciones (CoFeTel) postponed a vote on whether it will allow Grupo Televisa S.A. (TV) to enter into a mobile phone segment. Televisa, together with its partner Nextel, is the sole bidder for a 30 MHz nationwide block in the 1.7 GHz band of frequency. In last July, Televisa and Nextel together won one block of frequency ranging from 1850 MHz – 1990 MHz.
 
In February 2010, Televisa signed an agreement with NII Holdings Inc. (NIHD) to acquire a 30% stake of the latter’s wireless arm in Mexico, Nextel. Antitrust regulators of Mexico cleared the application of Televisa to partially acquire Nextel’s operations.
 
Nextel is currently working on building its nationwide 3G wireless networks. Televisa hopes to create an innovative converged communication platform by adding Nextel’s wireless and broadband services to its existing portfolio of pay TV services that offers market leading content and multiple distribution channels. This new joint venture will offer converged quadruple play services consisting of Wireless, TV, Broadband Data, and Fixed line voice.
 
The main purpose of voting is that the Televisa-Nextel bid size for 30 MHz spectrum block is of just $14 million. This was miles away from $400 million bid size coated by the two largest Mexican wireless operators, viz, America Movil SAB (AMX) and Telefonica S.A. (TEF), for another block of wireless spectrum.
 
Despite this low bid size, Televisa-Nextel venture remains the only bidder due to the CoFeTel rules that restrict the amount of wireless spectrum that an individual operator can secure. Both American Movil and Telefonica already reached that level. Recent moves by the Mexican government to conduct auctions for both fiber optic strands and wireless spectrums are aimed to boost competition in the country’s telecom market.
 
We maintain our Neutral recommendation for Televisa. Currently, it is a short-term Zacks #3 Rank ('Hold') stock.

 
AMER MOVIL-ADR (AMX): Free Stock Analysis Report
 
NII HLDGS-CL B (NIHD): Free Stock Analysis Report
 
TELEFONICA S.A. (TEF): Free Stock Analysis Report
 
GRUPO TELEVISA (TV): Free Stock Analysis Report
 
Zacks Investment Research