Published June 14, 2012
Mexico's Federal Competition Commission, or CFC, said Thursday it had approved dominant TV broadcaster Televisa's bid for about half of the country's No. 3 wireless operator, Iusacell.
In a statement, the CFC said it imposed certain conditions on the deal to avert the risk of collusion between Grupo Televisa and Grupo Salinas, the parent company of both No. 2 TV broadcaster TV Azteca and Iusacell.
Those conditions include non-discrimination in the sale of advertising to telecommunications firms; the separation of Iusacell's management from that of the broadcast and pay TV businesses of Televisa and Grupo Salinas; and a requirement that broadcast and pay TV content be sold separately.
The CFC accepted the appeal filed by Televisa and Iusacell against its earlier ruling on Jan. 24, when it rejected Televisa's bid to take a roughly 50 percent interest in the mobile phone company.
Televisa's $1.6 billion bid included roughly $37.5 million in cash and and $1.57 billion in convertible debt.
In its initial ruling, the CFC said an alliance between Televisa and Iusacell could have an adverse effect on three markets: mobile telephony and broadcast and pay television and create "competition problems."
Mexico's broadcast television is a duopoly market dominated by Televisa and TV Azteca.
But in its statement Thursday, the CFC said it gave the green light to the tie-up after imposing several conditions that "eliminate the risks detected in the transaction."
One of them states that "Iusacell's board of directors cannot include employees of other Grupo Televisa and Grupo Salinas companies that are directly involved in the broadcast or pay television businesses."
Another says "top Iusacell executives must be completely disassociated from the management of any other Grupo Televisa or Grupo Salinas company."
Additionally, Televisa must divest its equity interest in the firm Total Play, which provides triple-play services (telephone, pay TV and Internet) in the Valley of Mexico (Mexico City and part of Mexico state), leaving it entirely in the hands of Grupo Salinas.
Finally, the CFC said that "if an auction of a third (nationwide broadcast) television channel is not successfully completed in 24 months, a mechanism will be automatically activated to dissolve the alliance between Grupo Televisa and Grupo Salinas in Iusacell."
The competition watchdog added that failure to comply with the conditions "would carry a fine of up to 10 percent of the annual revenues" of Grupo Televisa and Grupo Salinas.
The entire process will be supervised by the CFC and submitted to "independent audits."
Iusacell is the No. 3 operator in a wireless market that America Movil-controlled Telcel dominates with a 70 percent share.
On Wednesday, the head of Spanish telecom giant Telefonica's Mexico unit, Juan Abellan, announced a network-sharing and infrastructure build-out deal between Telefonica and Iusacell aimed at benefiting some 27 million subscribers and eliminating monopolistic practices in Mexico.
Telefonica and Iusacell - which have market shares of roughly 20 percent and 5 percent, respectively, in Mexico - will share cellular towers and build out network infrastructure stretching for some 98,000 kilometers (60,895 miles) to extend their coverage to between 85 percent and 90 percent of the population. EFE