Televisa’s $1.6 Billion Iusacell Deal Rejected by Mexico, Universal Says

Grupo Televisa SAB’s plan to acquire a 50 percent stake in Grupo Iusacell SA (CEL*) for $1.6 billion was rejected by Mexico’s antitrust agency after a nine-month review, El Universal and Dow Jones Newswires reported.

The Federal Competition Commission’s board voted 3-2 against the deal yesterday, the newspaper said today on its website, citing unnamed sources close to the process. The companies will be able to ask the agency to review its decision, the newspaper said. Dow Jones also reported the deal was rejected, citing an unnamed person close to the transaction.

If the deal is rejected, it would hinder Televisa’s aspirations to enter the mobile-phone market and escalate its rivalry with billionaire Carlos Slim’s America Movil (AMXL) SAB. Televisa also has money at stake, having already spent about $1.2 billion as of September to acquire convertible debt it planned to turn into Iusacell shares once the transaction was approved by the government.

“There won’t be an official response until we’ve been notified and have reviewed the result, as required by various regulations of public companies,” Televisa said in an e-mailed statement. An Iusacell official had no immediate comment. The antitrust agency said last night in a statement it must notify the parties before it can officially announce the vote.

Contradicting Reports

Televisa dropped 2.1 percent to 54.14 pesos at the close in Mexico City, the lowest price since Nov. 29. The shares fell 8.1 percent last year.

Two other publications contradicted the reports of the deal’s rejection. Proceso magazine and Dario Celis, a columnist at Excelsior newspaper, said the deal was approved with unspecified conditions.

Iusacell, Mexico’s third-biggest mobile-phone carrier, may not survive without the investment, its lawyer Francisco Borrego said earlier this month. Iusacell is closely held by billionaire Ricardo Salinas, who also controls TV Azteca SAB, the second- biggest Mexican broadcaster behind Televisa.

An alliance would bring the nation’s two biggest over-the- air TV networks closer together and could harm competition, said critics including the Mexican Association for the Right to Information. Televisa and Salinas’s group had said they would continue to compete aggressively in broadcast TV.

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

To contact the editor responsible for this story: Peter Elstrom at pelstrom@bloomberg.net

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