Telefonica Open to Mexico Deals With AT&T, America Movil

  • Operating chief says better infrastructure key for growth
  • Phone carrier could consider sharing networks with rivals

Telefonica SA is open to deals and agreements with rivals including AT&T Inc. in Mexico to help bolster growth in Latin America’s second-largest economy.

The Spanish carrier “has the obligation to explore possibilities” if they appear, such as sharing networks with AT&T or accessing towers that America Movil SAB spun off into a separate company, Chief Operating Officer Jose Maria Alvarez-Pallete said this week during an industry conference in Santander, Spain.

Telefonica needs to improve its network in Mexico to grow further and any potential deal with America Movil’s tower unit would depend on whether the Mexican company makes its infrastructure available, he said.

Telefonica, Europe’s biggest investor in Latin American telecommunications, has for years been trying to boost growth in Mexico through acquisitions in a bid to catch up with America Movil. Competition to control the country’s phone and Internet industry intensified this year when AT&T acquired Grupo Iusacell SA, in which Telefonica was also interested.

“We still have a lot of work to do in Mexico, but for the first time we have elements” for growth, Pallete said, adding that the Mexican division is among the company’s fastest-growing units this year. Still, “we can’t intend to grow in Mexico without having a good network and we are light-years away from it. So, what has to be expected from us in Mexico is strong investments, and potentially agreements to access towers or for combined creation of infrastructure.”

AT&T was working on a deal to rent towers from Telesites, the recently spun-off unit of America Movil, people familiar with the matter said in June. A renting agreement would grant AT&T access to the most pervasive network in Mexico with about 11,000 wireless towers.

Spain Recovery

Telefonica shares rose 1.2 percent to 12.09 euros at 11:13 a.m. in Madrid. The stock has added 2.5 percent this year.

In Spain, Telefonica is ending years of revenue declines in the current quarter, according to Luis Gilperez, head of the Spanish unit.

“There is a continued improvement from the previous quarter,” Gilperez told reporters in Santander Thursday. Sales in Spain rose in July and August, he said.

When it presented second-quarter results, Telefonica said revenue in Spain had stabilized in May and June for the first time since December 2009. The company has also said it expects to return to revenue growth in the country this year.

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