Reuters: Mergers News: Mexico regulators vote on Televisa-Iusacell deal

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Mexico regulators vote on Televisa-Iusacell deal Jun 6th 2012, 05:01 Wed Jun 6, 2012 1:01am EDT * Televisa wants half of cell phone firm Iusacell * $1.6 bln deal under regulatory review By Cyntia Barrera MEXICO CITY, June 6 (Reuters) - Mexican competition regulators are due on Wednesday to give a final verdict on broadcaster Televisa's planned purchase of half of cell phone company Iusacell, a $1.6 billion deal aimed at challenging the telecoms domination of Carlos Slim. The board of the Federal Competition Commission (Cofeco) blocked the tie-up in January in a 3-to-2 vote, voicing concerns Televisa could combine its strength with that of Iusacell's sister company and Mexico's No. 2 broadcaster, TV Azteca. "You are talking about a strategic alliance between companies that make up 95 percent of broadcast television and more than 50 percent of cable television," said Fernando Butler, president of consulting firm BHMC. Such a deal would create an incentive for the pair to fix advertising prices in anything from television spots to content download on smartphones, regulators said. Both Televisa and Iusacell requested regulators to reconsider the ruling, a common move in this kind of case. Televisa's Chief Executive, Emilio Azcarraga, said in March his company was ready to take steps to address the agency's concerns and argued the tie-up between the rival broadcasters would be good for the telecoms industry. Mony de Swaan, head of Mexico's telecoms regulator Cofetel, said last week he agreed, provided the companies complied with Cofeco's demands. Cofetel has no say in the matter. Slim, 72, the world's richest man, controls around 70 percent of the Mexican mobile market via his company America Movil and also has a share of around 80 percent of the country's fixed line business. Iusacell has close to 5 percent of the Mexican phone market. Irene Levy, head of telecoms think tank Observatel, wrote in a column this week that Cofeco could extract compromises from Televisa and TV Azteca in exchange for waving through the deal. "There are two options: that (regulators) keep blocking, which seems unlikely, or that the deal is approved under certain conditions, for example, that both broadcasters allow the retransmission, perhaps for free, of their open air channels to cable companies," she wrote in the newspaper El Universal . Mexico has long failed to promote competition in key industries, including telecommunications and the media. Lack of tough regulation and laws drafted in the days before the Internet and bundling of services, have led to a weak market. The Organisation for Economic Co-operation and Development said in a report earlier this year Mexicans were overcharged $13.4 billion a year between 2005 and 2009 for fixed-phone, mobile and broadband services, markets dominated by Slim. The billionaire has vehemently disputed the report. Last month, Cofeco revoked a record 12 billion peso fine ($925 million) against America Movil's Mexican mobile unit Telcel after the company agreed to lower interconnection rates. Some analysts think that because the watchdog quashed the Slim fine, Televisa and Iusacell may now stand a better chance of getting their own deal approved. Although Cofeco's decision is scheduled to be made on Wednesday, the watchdog will not provide details on its ruling until the companies have been officially notified. That could delay publication of the decision by a day or more. Link this Share this Digg this Email Reprints

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