Telefonica investigating options to strengthen Mexican presence

Telefonica is looking to take on America Movil in Mexico, where the latter has a hefty market share of around 70%.

Reportedly, Telefonica is investigating the possibility of acquiring or partnering with a local business in order to boost its presence. The operator may have been spurred by Mexico’s upcoming regulatory reform, which is aimed at boosting competition and weakening America Movil’s dominance.

Following the reform, the new Mexican regulator Ifetel will become the authority that issues and revokes telecom licences. Under the new legislation, any company classified as dominant – i.e. with a market share of over 50% - can be forced to sell assets by the regulator. America Movil has stated that the new legislation may adversely impact its business.

Telefonica’s Mexican operation is branded as Movistar. It is the second largest player in the market with 19.1 million subscribers – by contrast, America Movil subsidiary Telcel has 72.5 million connections.

Reportedly Telefonica has been holding talks with operator Iusacell and cable provider Megacable. However, the shareholders of both groups are reluctant to yield control of the assets to Telefonica, which may scupper a potential deal. Iusacell is the third largest operator in Mexico with around 9 million subscribers.

 

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