Telefonica Can’t Have Iusacell Stake, Salinas Says

Billionaire Ricardo Salinas said he isn’t willing to sell his 50 percent stake in Mexican wireless carrier Grupo Iusacell SA even though Telefonica SA (TEF) desires it.

Telefonica, the second-largest mobile-phone company in Mexico, “wishes to buy Grupo Salinas’s stake in Iusacell. It is not for sale,” Salinas said yesterday on Twitter. “I am optimistic about Iusacell’s future. We will keep investing to grow.”

Telefonica said earlier yesterday in a filing that it’s in ongoing talks for a deal in Mexico, though “no agreement has been reached.” News site El Confidencial reported yesterday that the company was in contact with Iusacell, which Salinas co-owns with broadcaster Grupo Televisa SAB. Bloomberg News reported Feb. 5 that the two companies were in discussions to combine their mobile-phone operations in Mexico.

Televisa declined to comment on Telefonica’s statement, a press official for the company said.

A deal between Telefonica and Iusacell, the second- and third-biggest mobile carriers in Mexico, would give them most of the portion of the country’s mobile market that isn’t controlled by Carlos Slim’s America Movil SAB (AMXL), which has about 70 percent of subscribers.

Still, Salinas said new regulations in Mexico designed to boost competition in the phone industry gave him “certainty and confidence to keep growing” without a Telefonica deal.

New Law

“This signals that Mr. Salinas will drive a hard round of negotiations and indicates that nothing is crystallized yet,” Gregorio Tomassi, an analyst at Banco Itau BBA, said in a note yesterday. He maintained the equivalent of a sell recommendation on Televisa (TLEVICPO) shares.

Iusacell was valued at $3.2 billion when Televisa acquired a 50 percent stake in the company in 2012. It operates only in Mexico, while Madrid-based Telefonica has phone businesses throughout Latin America and Europe.

Televisa has said it would await the outcome of the new telecommunications law, which President Enrique Pena Nieto enacted this month, before deciding whether to invest further in Iusacell.

The law forces America Movil’s Telcel unit to share its network infrastructure-- the largest in Mexico-- with other operators and removes barriers for customers who want to switch carriers.

Telefonica is seeking to expand its customer base in Mexico before the market gets more crowded. America Movil aims to sell assets to a new competitor to cut its share to below 50 percent to meet regulatory demands, Slim said this month. At least one European company and two U.S. companies have expressed interest in those assets, Felipe Canales, chief financial officer of Mexican landline phone carrier Axtel SAB, said this week, citing “good information” the company has gleaned.

New Round

The announcement of America Movil’s breakup probably triggered a new round of conversations between Telefonica and Televisa, Itau’s Tomassi said.

Shares of Telefonica rose less than 1 percent to 12.35 euros yesterday in Madrid, valuing the company at 56 billion euros ($75 billion). Televisa added 1.9 percent in Mexico City to 93.73 pesos, the highest closing price on record.

While Mexico is the world’s most populous Spanish-speaking country, it only accounted for 2.8 percent of Telefonica’s revenue in 2013, less than Argentina, Chile, Venezuela, Peru and Colombia, data compiled by Bloomberg show. Telefonica is scheduled to report second-quarter earnings today before markets open in Madrid.

It Depends

While Televisa hasn’t invested more in Iusacell so far this year, if may consider further spending if it sees more opportunity in the future, Televisa Executive Vice President Alfonso de Angoitia said on a conference call earlier this month.

“It will all depend on the regulatory changes, and also it will all depend on the performance of the company,” Angoitia said.

Salinas has fended off acquisition speculation before. In January 2011, he denied a newspaper report on a potential sale to Televisa, saying on Twitter that he planned to keep investing in its Mexican network. The deal to sell the 50 percent stake to Televisa was announced three months later.

“The controlling shareholder of Iusacell is Grupo Salinas, and the goal continues to be establishing the fastest wireless data network in Mexico,” he said at the time.

(An earlier version of this story was corrected to show that Televisa amended its statement to say that it had no comment on Telefonica’s filing.)

To contact the reporters on this story: Patricia Laya in Mexico City at playa2@bloomberg.net; Rodrigo Orihuela in Madrid at rorihuela@bloomberg.net

To contact the editors responsible for this story: Sarah Rabil at srabil@bloomberg.net; Kenneth Wong at kwong11@bloomberg.net Crayton Harrison, Carlos Manuel Rodriguez

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