On Mar 18, 2014, we issued an updated research report on
Grupo Televisa, S.A.B.
). We anticipate that the recent regulatory reform in the Mexican
telecommunications industry will affect the company's operations.
The new regulation will encourage other cable/satellite TV
operators to enter the Mexican pay-TV market.
Grupo Televisa has delivered negative earnings surprise in the
last three quarters out of four, with an average negative
surprise of 8.9%. In the fourth quarter of fiscal 2013, the
company reported mixed financial results. Earnings per GDS came
in below the Zacks Consensus Estimate whereas net revenue
outpaced the same.
Televisa currently dominates approximately 70% of the Mexican
broadcasting and pay-TV market. The Federal Telecommunications
Institute wants to restrict the maximum hold of a company in a
market to 50%. Televisa also has to share its broadcast towers
with competitors for a stipulated amount of fees.
The new telecommunications industry reform bill of the Mexican
government will allow
America Movil S.A.B. de C.V.
) to enter the broadcasting market of Mexico, which has been
controlled by Televisa for a long time. This may substantially
reduce Televisa's advertisement revenues.
On the other hand, the new regulations may allow Televisa to
capture a large chunk of the wireless market. In 2010, Televisa
abandoned its wireless venture with Nextel de Mexico, a
NII Holdings Inc.
), owing to prolonged legal disputes.
Currently, the company holds a 50% stake in Grupo Iusacell, a
small wireless operator of Mexico. However, Bloomberg reported
) is negotiating with Televisa and Grupo Salinasto, the remaining
50% stake holder of Iusacell, to acquire the company.
Grupo Televisa currently carries a Zacks Rank #5 (Strong
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