In an apparent challenge to the dominance of America Movil, Mexico’s media firm Grupo Televisa has acquired a 50% stake in the country’s third largest operator, Iusacell. Shareholders of both firms will have “equal corporate governance” over the resulting entity.
Televisa has stated that “Iusacell is a well positioned mobile operator with an extensive national network. This transaction will strengthen Iusacell’s balance sheet, allowing it to make the necessary investments to properly compete in this industry, therefore improving the quality and availability of mobile service offerings in the market.”
America Movil - controlled by tycoon Carlos Slim - and the number two operator Movistar have a significant lead on Iusacell, although Televisa hopes that its investment will “strengthen Iusacell’s capital structure, finance future capital expenditures, and launch new and better services.”
The broadcaster is investing US$37.5 million in the operator’s stock, as well as US$1.57 billion in convertible debt. Televisa has been exploring options for an entry into the mobile market, including a proposed deal with Nextel, the smallest Mexican operator; however, this fell through late last year. The new deal makes allies out of former rivals; businessman Ricardo Salinas Pliego, who controls Iusacell, also controls television firm TV Azteca, a competitor to Televisa.