Telefonica confirms negotiations for potential Mexican deal

Telefonica has confirmed that it is in talks with a Mexican mobile firm via a regulatory filing, but has declined to name the company in question.

Previous reports have indicated that the Spanish firm could be negotiating a takeover deal with its smaller rival Iusacell. Although the resulting entity would consist of Mexico’s second- and third-placed operators, it would still have a substantially smaller market share than America Movil.

The market leader, controlled by Carlos Slim, is feeling the heat from the country’s new regulator IFT. Its Mexican unit, Telcel, has agreed to sell off assets in order to bring its market share – currently at around 70% - to beneath 50% so that it can no longer be considered dominant. Telefonica has been mooted as a potential buyer.

Iusacell, which is co-owned by billionaire Ricardo Salinas and TV firm Televisa, is believed to have been in talks with Telefonica about a possible merger for several months. The combined base of the two firms is around 27 million, which would give the resulting entity a 27% market share – still significantly behind America Movil’s 71 million connections.

 

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