Grupo Televisa, S.A.
), the undisputed leader in the Mexican pay-TV market, has further
solidified its foothold by acquiring a 100% stake in rival pay-TV
operator Grupo Cable TV, popularly known as Cablecom S.A.
Last year, Televisa had acquired a 51% stake in Cablecom after
convertible debt exchange of a 95% stake in Tenedora Ares SAPI,
which originally owned 51% of Cablecom. The deal included an option
to acquire the remaining 49%, subject to regulatory approvals.
Recently, Televisa declared its receipt of the required
regulatory approval to acquire the remaining 49% stake in Cablecom
for a total consideration of 8.55 billion Mexican Pesos
(approximately $654 million).
Televisa, which serves 8.9 million customers through its cable
or satellite TV services, currently dominates approximately 70% of
the Mexican broadcasting and pay-TV market.Acquisition of Cablecom
will add another 1.2 million customers (video, data or voice) to
its kitty with at least 840,000 TV (video) subscribers.
Televisa currently serves approximately 3 million Internet
(data) and telephony (voice) customers. Acquisition of Cablecom
will render economies of scale to compete with America Movil SAB (
) which serves 22 million high-speed Internet and telephony
Meanwhile, the government of Mexico has decided to reform its
telecommunications sector, predominantly the wireline and wireless
phone segments and the cable and satellite TV segments.
The telecommunications sector in Mexico is highly monopolistic
with merely one or two companies dominating the market. The Mexican
government, however, intends to increase competition by encouraging
the entry of other operators.
In this regard, regulator Federal Telecommunications Institute,
popularly known as IFT, identified broadcasting giant Televisa and
telecom behemoth America Movil as the dominant players in their
However, there is a provision in the new telecom regulation
which enables any company to acquire its competitor so long their
combined market share doesn't exceed 20% of the Mexican
telecommunications industry. In line with this provision, Televisa
has duly acquired full control of Cablecom.
Other Stocks to Consider
Televisa currently carries a Zacks Rank #3 (Hold). Better-ranked
stocks in the Broadcast TV/Radio industry include Media General
) and Saga Communications Inc. (
). Both the stocks currently carry a Zacks Rank #2 (Buy).
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