Telefonica Said in Talks to Rent Towers From America Movil

  • A deal would let Telefonica access Mexico's largest network
  • AT&T also said to be interested in America Movil sites

Telefonica SA is in talks to rent mobile-phone towers in Mexico from America Movil SAB’s Telesites unit to help lower the costs of improving coverage and offering faster services, according to people with knowledge of the matter.

If an agreement can be reached, Telefonica would gain access to Mexico’s most pervasive wireless network of about 11,000 towers at Telesites, the infrastructure company that was recently spun off by America Movil, said the people, who asked not to be identified because the the negotiations are confidential.

Telefonica, the second-largest wireless provider in Mexico, has for years been trying to catch up with market leader America Movil. Competition in the country’s telecommunications market is set to intensify after AT&T Inc. completed the acquisition of Grupo Iusacell SA and Nextel Mexico this year. AT&T was also said to be working on a separate deal to rent towers from Telesites, people familiar with the matter said in June.

Representatives for Mexico City-based America Movil and Madrid-based Telefonica declined to comment. A spokesman for Dallas-based AT&T didn’t return a phone call on a U.S. public holiday. 

Telefonica shares rose 1.5 percent to 12.06 euros at 9:42 a.m. in Madrid. America Movil closed at 14.96 pesos in Mexico City yesterday.

Chief Operating Officer Jose Maria Alvarez-Pallete said on Aug. 30 that Telefonica needs to improve its network in Mexico. The carrier “has the obligation to explore possibilities” if they appear, such as accessing Telesites’ towers or sharing networks with AT&T, he said.

The spinoff of Telesites, already approved by America Movil shareholders, has been delayed until Mexico’s telecommunications regulator, IFT, meets to review the deal. IFT President Gabriel Contreras has said it would happen in August or September. An IFT press official said the regulator had not yet met to discuss the spinoff.

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