Nov. 6 (Bloomberg) -- Grupo Televisa SA plans to spend $450 million to upgrade its Mexico City cable network, improving Web speeds to win more Internet clients, said Jean Paul Broc, chief executive officer of the division.

The investment will occur over a three-year period, Broc said yesterday in an interview. The spending would help the Empresas Cablevision SAB unit reach a million more potential customers by 2012, a 67 percent increase, he said.

Cablevision will replenish its network with fiber-optic lines to offer service at speeds as fast as 6 megabits a second, Broc said. That is 50 percent faster than the top speed advertised by Telefonos de Mexico SAB. Telmex, which has almost 90 percent of Mexico’s fixed phone lines, lost customers last quarter to Cablevision as the cable operator sold more packages with multiple services, like Internet, phone and television.

“Telmex is the only obvious competitor and it still can’t offer pay TV completely through its own network,” said Eric Wilson, an analyst with Actinver SA in Mexico City, who has an “outperform” rating on Televisa shares. “Until that happens, get in now and get a piece of that market.”

Telmex has unsuccessfully sought government permission to offer its own TV service to compete with cable operators such as Cablevision. The former state-run phone monopoly has a partnership with satellite-TV provider Dish Mexico, which has sales kiosks in Telmex stores and allows customers to pay their bills through Telmex.

Faster Surfing

Mexico City-based Cablevision had about 112,000 phone customers at the end of September, almost triple its total from a year earlier. The company’s parent is the largest Spanish- language broadcaster in the world.

Cablevision is Mexico’s third-biggest cable carrier behind Megacable Holdings SAB and Cablemas SA, the second of which is also controlled by Televisa. About 20 percent of Cablevision’s network used fiber-optic lines at the end of September.

Televisa had 28.7 billion pesos ($2.15 billion) in cash at the end of September. The company, which also owns broadcast and cable networks, has forecast $220 million in investments this year in its cable division, part of a $500 million budget for total capital expenditures.

The network upgrade at Cablevision, the main cable carrier in the Mexico City area, has already allowed the company to start offering the higher speeds in some locations, Broc said. Telmex’s fastest advertised speed for home users is 4 megabits.

Televisa climbed 28 centavos to 54.91 pesos at 4 p.m. New York time in Mexico City trading. Telmex advanced 25 centavos to 11.67 pesos. Carlos Slim, the Mexican billionaire, controls more than 70 percent of Telmex’s voting shares.

Telmex, also based in Mexico City, plans to begin investing by early next year in its own fiber-optic project to increase speeds further in some areas, Chief Innovation Officer Marco Galvan said in September. Telmex had 17.3 million phone lines at the end of September, down 1.8 percent from a year earlier. A Telmex representative declined to comment on Cablevision’s plans.

To contact the reporter on this story: Crayton Harrison in Mexico City at tharrison5@bloomberg.net

Last Updated: November 6, 2009 16:52 EST