Televisa Strikes Antitrust Deal to Acquire Iusacell Stake

Grupo Televisa SAB, the world’s largest Spanish-language broadcaster, climbed to the highest price in five weeks after winning conditional antitrust approval for the $1.6 billion acquisition of a 50 percent stake in mobile-phone carrier Grupo Iusacell SA.

Televisa rose 2 percent to 56.15 pesos at the close in Mexico City, the highest price since May 10. The Federal Competition Commission, which reversed an earlier decision on appeal, said today that Televisa could go through with the transaction if the broadcaster takes steps to open itself up to more competition.

The settlement ends a 14-month struggle by Mexico City-based Televisa for the right to take on billionaire Carlos Slim’s America Movil SAB in the mobile-phone business. Iusacell has about 6 percent of Mexico’s wireless subscribers, compared with America Movil’s 70 percent.

“The resolution is positive for Televisa,” said Valeria Romo, an analyst at Monex Casa de Bolsa in Mexico City, today in a research note. She recommends buying the shares. “It presents the opportunity to enter the mobile market, which is valued at $30 billion and showed growth in 2011 of 3.5 percent.”

Televisa said it had agreed to several antitrust conditions and is reviewing the verdict. Iusacell is also studying the decision, a process that may take weeks, said Luis Nino, a spokesman for the company. Some of the conditions are “very tough, very onerous, difficult to understand and to comply with,” he said.

Alliance Created

The deal creates an alliance between Televisa and Ricardo Salinas, Iusacell’s billionaire owner, who also controls broadcaster TV Azteca SAB. Televisa won approval of the Iusacell investment by overcoming regulatory concern that it could lead to collusion between the two broadcasters in the TV business.

Azteca fell 1.1 percent to 8.42 pesos in Mexico City. Iusacell is closely held. America Movil slid 0.7 percent to 16.81 pesos.

The new ruling overturns a vote in January in which the antitrust agency cited possible collusion and the need to protect Iusacell’s Totalplay pay-TV business, which competes with Televisa’s Empresas Cablevision unit.

Under terms of the antitrust settlement, the partnership can be dissolved if the government fails to auction airwaves for a third broadcast TV network in the next 24 months. That takes away the incentive for Televisa and Azteca to slow the auction process with legal challenges, the antitrust agency said.

Nino, the Iusacell spokesman, said that condition was problematic because the TV broadcasters don’t have direct control over the auction, which will be managed by the Federal Telecommunications Commission.

The antitrust agency said both broadcasters will also have to offer cable and satellite TV providers the option to buy their over-the-air channels separately from the cable channels both companies produce. Televisa said it has created a package of its four over-the-air channels to offer to carriers.

Televisa’s Position

Iusacell will also transfer ownership of its Totalplay unit, which sells TV, phone and Internet service to home users in Mexico City, to a separate entity owned by Salinas, meaning Televisa won’t own a stake in a competitor to its own cable-TV carrier units.

Televisa has argued that the transaction would bring more competition to the wireless industry by creating a stronger, better-funded Iusacell, which sought a restructuring plan with creditors in 2010 for the second time in four years.

The broadcaster announced the purchase of the stake in April 2011. It spent the $1.6 billion last year, acquiring debt that would be convertible into shares equal to 50 percent of Iusacell once regulators approved the transaction. The debt has an interest rate of 2 percent.

In addition to Slim’s company, Mexico City-based Iusacell trails Madrid-based Telefonica SA in total wireless subscribers.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE