We reaffirm our long-term Neutral recommendation on
Grupo Televisa S.A.
) ahead of its third-quarter 2012 financial results. In the second
quarter of 2012, all the five business segments of Televisa
generated considerable revenue growth. Moreover, Teleisa is
continuously generating higher royalties from its Univision venture
in the U.S. We are quite optimistic regarding the newly formed
Televisa-Iusacell venture in the Mexican wireless market.
The company at present controls four free-to-air broadcast
channels, the largest of the two satellite TV channels, and three
cable TV units offering triple-play TV, voice and Internet
services. Undoubtedly, a foothold in the lucrative mobile market
will make the company a highly integrated broadcasting and telecom
operator in Mexico. Meanwhile the stock price has soared nearly 28%
in the last year. We believe Televisa is currently fairly valued
and will not provide above market gain anytime soon.
Televisa is finally on the verge of entering into the lucrative
Mexican wireless market. In last June, the company won conditional
approval from the Mexican regulator CoFeCo (CFC) to acquire 50%
stake of Grupo Iusacell, a small wireless operator of Mexico
controlling around 5% market share. Mexican wireless market is
highly monopolistic. Telcel, a unit of
America Movil SAB
), controls over 70% of the market,
) controls more than 22%.
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. Televisa-Iusacell venture will
create a formidable player in the highly concentrated Mexican
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