Televisa invests $1.6 billion in Iusacell

08 April 2011 | Kavit Majithia


Mexican broadcaster Grupo Televisa has invested $1.6 billion in telecoms group Iusacell in a deal that is expected to provide the biggest challenge yet to Carlos Slim’s dominant position in Mexican telecoms.

Iusacell has over four million wireless subscribers and its reach expands to over 70% of the mobile and data market. Televisa believes the transaction “will strengthen Iusacell’s balance sheet, allowing it to make the necessary investments to properly compete in this industry.”

Much of the initial $1.6 billion investment, approximately $1.565 billion, will be used to address the company’s growing debt. The remaining $37.5 million will be used as equity and allow Iusacell to invest in the country’s growing mobile, voice and data services. Televisa said its extensive infrastructure in the region will allow the launch of quadruple play of converged services to include television, as a result of the deal.

The proposed deal, still subject to regulatory approval, marks Televisa’s first entrance into an ever-growing market. Analyst firm Pyramid Research estimates total revenues in the country’s telecoms industry is expected to reach up to $35 billion by 2015 and mobile data to grow at a 23% rate over the same period.

"Iusacell's problem has always been scale and working capital as the company has never been big enough to generate enough cash to invest in getting bigger," says Wally Swain, SVP emerging markets at Yankee Group. "This deal will provide enough scale to create a viable alternative to the top two players in Mexico."