Grupo Televisa S.A.
), the largest media company in the Spanish speaking world, is
finally on the verge of entering into the lucrative Mexican
wireless market. Recently, the company won conditional approval
from the Mexican regulator CoFeCo (CFC) to acquire 50% stake of
Grupo Iusacell, a small wireless operator of Mexico.
Yesterday, in a filing with the Mexican stock exchange, Televisa
declared that the company accepted all the conditions imposed by
CFC and thereby converted its $1.6 billion investment in the
low-interest bearing notes of GSF Telecom Holdings, the holding
company of Grupo Iusacell, into 50% shares of it.
CFC was initially reluctant about this merger. The main concern
of CFC was that although Televisa-Iusacell venture will create a
formidable player in the highly concentrated Mexican wireless
market, the merger will indeed create a virtual monopoly in the
Mexican TV market. WhileTelevisa controls 70% share of the Mexican
pay-TV and satellite TV market, Grupo Iusacell is a part of Grupo
Salinas, which also controls TV Azteca, the second largest pay-TV
operator in Mexico. In fact, these two entities control
approximately 100% of the Mexican TV broadcasting market
To solve the monopolistic concentration, CFC imposed several
restrictive conditions on the Televisa-Iusacell merger including
(1) the deal will depend on the success of the proposed government
auction of the TV frequency. The Mexican government wants at least
a new TV broadcaster in addition to incumbent Televisa and TV
Azteca (2) both Televisa and TV Azteca should refrain from forcing
any TV advertiser to become a Iusacell client (3) Televisa must
offer new pay TV package that includes all four of its free public
channels for which the company currently charges a fee to cable
operators and (4) Televisa must offer the sale of advertising time
to all incumbent telecom operators.
The situation is just the opposite in the wireless market. Here,
Telcel, a unit of
America Movil S.A.B.
), controls over 70% of the market,
) controls more than 22%, and Iusacell controls hardly 5% of market
share. Interestingly, Iusacell has an existing agreement with
Telefonica for network sharing in order to improve both the
entities coverage and service quality.
Televisa currently holds four free-to-air broadcast channels,
the largest of the two satellite TV channels, and three cable units
offering triple-play TV, phone and Internet services. Undoubtedly,
a foothold in the lucrative wireless market will make it a complete
and powerful telecom operator in Mexico.
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