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GRUPO TELEVISA SAB (TLEVISA CPO)

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Grupo Televisa SAB : Mexico's Iusacell To Stick It Out With Televisa; No Outright Sale

02/02/2012 | 04:05pm US/Eastern
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By Amy Guthrie

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An outright sale of Mexican wireless operator Grupo Iusacell is "not on the table" after Mexico's antitrust regulator squashed a tie-up between the phone company and media firm Grupo Televisa SAB (TV), an Iusacell official said Thursday.

"We continue on the route of re-consideration," Eduardo Ruiz Vega, Iusacell's director of compliance told Dow Jones Newswires.

Iusacell and Televisa have 30 working days to ask the Federal Competition Commission to reconsider their petition, and the antitrust body has 60 working days to respond. Iusacell is optimistic that the pair will eventually prevail.

"We can't think about the next stage," Ruiz Vega said when asked about severing the proposed partnership with Televisa.

Televisa agreed in April to pay $1.6 billion for a 50% stake in Iusacell, in a bid to gain entry to the Mexican mobile phone market. Confirmation emerged Wednesday that the agency had struck down the deal, basing its decision on concerns of collusion in the open-TV market by Televisa and TV Azteca, the country's two main broadcasters.

Mexican billionaire Ricardo Salinas Pliego controls both Iusacell and TV Azteca SAB (AZTECA.MX). Iusacell claims just 4% of the Mexican mobile market.

"We don't see the relationship between open-TV and the mobile market," Ruiz Vega said. Televisa also offers Internet, cable TV and fixed-line phone service.

Televisa is in the awkward position of having already completed its investment in Iusacell during the fourth quarter, with $37.5 million dispensed in the form of equity and $1.57 billion in convertible debt. The debt earns a 2% coupon and must be converted to equity by December 2015.

Both Iusacell and Televisa say that the investment in the mobile company has already been put to work by Iusacell to fund its business plan, expand its infrastructure, and to attempt to compete more aggressively for customers.

Analysts are concerned that Televisa's investment in Iusacell may be tied up for an extended period of time, or that it will be non-refundable, while the broadcaster is unable to move forward with the equity conversion. Televisa's American Depositary Receipts were down 3.1% to $19.77 in recent trade.

-By Amy Guthrie, Dow Jones Newswires; (5255) 5980-5177, amy.guthrie@dowjones.com

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