Televisa Wireless Venture Stalled - Analyst Blog

Loading...
Loading...

Grupo Televisa S.A.
(
TV
), the undisputed leader in the Mexican broadcast market, suffered yet another setback in its bid to enter the lucrative wireless market of Mexico. Yesterday, a court ruling prevented Mexico's Telecommunications Ministry from allotting a slot of wireless spectrum for which the company had bid in an auction together with its partner Nextel Mexico, a subsidiary of
NII Holdings Inc.
(
NIHD
).


On August 17, 2010, the Mexican Wireless regulator CoFeTel approved the auction bid submitted by Televisa and Nextel Mexico for a 30 MHz nationwide block in the 1.7 GHz band of wireless frequency. Last July, Televisa and Nextel together also won one block of frequency ranging from 1850 MHz – 1990 MHz.


This bid raises several controversies because the Televisa-Nextel bid size for the 30 MHz spectrum block is just $14 million. This is miles behind the $400 million bid size of the two largest Mexican wireless operators, viz,
America Movil SAB
(
AMX
) and
Telefonica S.A.
(
Loading...
Loading...
TEF
), for another block of wireless spectrum.


Despite this low bid size, Televisa-Nextel venture remains the only bidder due to the CoFeTel rules that restrict the amount of wireless spectrum that an individual operator can secure. Both American Movil and Telefonica have already reached that level.  The recent move by the Mexican Government to conduct auctions for both fiber optic strands and wireless spectrums are aimed at boosting competition in the country's telecom market.


We believe the recent court ruling is a severe blow to Televisa which has already invested a lot to become a wireless operator. In February 2010, Televisa signed an agreement with NII Holdings to acquire a 30% stake in the latter's wireless arm in Mexico, Nextel for approximately $1.44 billion. Nextel is currently working on building its nationwide 3G wireless networks.


Televisa is hoping to create an innovative converged communication platform by adding Nextel's wireless and broadband services to its existing portfolio of pay TV services that provides market leading content and multiple distribution channels. This new venture will offer converged quadruple play services consisting of Wireless, TV, Broadband Data and Fixed line voice.


AMER MOVIL-ADR (AMX
): Free Stock Analysis Report


NII HLDGS-CL B (NIHD
): Free Stock Analysis Report


TELEFONICA S.A. (TEF
): Free Stock Analysis Report


GRUPO TELEVISA (TV
): Free Stock Analysis Report


Zacks Investment Research
Loading...
Loading...
Posted In: Broadcasting & Cable TVConsumer DiscretionaryIntegrated Telecommunication ServicesTelecommunication ServicesWireless Telecommunication Services
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!

Loading...