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 one or two companies dominating the market.
In this regard, regulator Federal Telecommunications
Institute, which is popularly known as IFT, identified telecom
America Movil S.A.B.
) and broadcasting giant
Grupo Televisa S.A.B.
) as the dominant players in the respective markets.
The new telecommunications industry reform bill of the Mexican
government may pave the way for Televisa to capture a large chunk
of the wireless market share. The new regulations will also allow
America Movil to enter the broadcasting market of Mexico, which
has been controlled by Televisa for a long time.
However, a recent industry report stated that the proposed
regulation will defer America Movil's television expansion plans
for at least two years.
During these two years, Televisa can reformulate its
broadcasting and media strategy and can also take strategic
decisions regarding the lucrative Mexican wireless industry.
As stringent IFT measures, Televisa has to share its broadcast
towers with competitors for a stipulated amount of fees.
Moreover, the company will not be allowed to acquire exclusive
broadcasting rights of popular sports and entertainment events
such as world cup football.
Recently, Televisa stated that the new government
telecommunications bill would impose disproportionate obligations
on the company such as, limitations on its advertising sales, use
of infrastructure and content distribution. Currently, Televisa
has a Zacks Rank #4 (Sell).
In 2010, Televisa abandoned its wireless venture with Nextel
de Mexico, a subsidiary of
NII Holdings Inc.
) owing to prolonged legal disputes. Currently, the company holds
a 50% stake in Grupo Iusacell, a small wireless operator of
However, Bloomberg reported that
) is negotiating with Televisa and Grupo Salinasto, the remaining
50% stake holder of Iusacell, to acquire the company.
AMER MOVIL-ADR (AMX): Free Stock Analysis
NII HLDGS-CL B (NIHD): Free Stock Analysis
TELEFONICA S.A. (TEF): Free Stock Analysis
GRUPO TELEVISA (TV): Free Stock Analysis
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