Televisa Enters Mobile Phone Market - Analyst Blog

In a significant move, the Mexican wireless regulator Comision Federal de Telecomunicaciones (CoFeTel) approved yesterday the auction bid submitted by Grupo Televisa S.A. (TV) and its partner Nextel for a 30 MHz nationwide block in the 1.7 GHz band of wireless frequency. Last July, Televisa and Nextel together also won a block of frequency ranging from 1850 MHz – 1990 MHz.

This bid raises several controversies because the Televisa-Nextel bid size for 30 MHz spectrum block is of just $14 million. This is far below the $400 million bid size by the two largest Mexican wireless operators, 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.

In February 2010, Televisa, which controls around 70% of the Mexican pay-TV market, signed an agreement with NII Holdings Inc. (NIHD) to acquire a 30% stake of the latter’s wireless arm in Mexico, Nextel. Antitrust regulators in 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.

In June 2010, the Communications and Transportation Ministry of Mexico awarded a 20-year lease for two strands of 19,457 kilometers optical fiber lines to a consortium led by Televisa. The consortium formed by Televisa, Telefonica, and Megacable Holdings SAB submitted $69.3 million for this bid. Televisa declared that the consortium will further invest more than $100 million to establish the telecom network.

 
AMER MOVIL-ADR (AMX): Free Stock Analysis Report
 
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