Telefonica eyes group to bid on Mexico fiber optic

MEXICO CITY, March 8 Mon Mar 8, 2010 7:19pm EST

MEXICO CITY, March 8 (Reuters) - Spain's Telefonica (TEF.MC) may team up with small telephone and cable operators in Mexico to bid on a fiber optic network meant to challenge tycoon Carlos Slim's empire, a senior executive said on Monday.

Mexico's government is auctioning the use of fiber optic strands owned by the state electricity monopoly to create a new telecommunications backbone and give operators an alternative to infrastructure controlled by Slim's Telmex TELMEXL.MX.

Last month, executives of Mexican cable operator Megacable (MEGACPO.MX) said they would likely form a group with Telefonica, broadcaster Televisa (TLVACPO.MX) and smaller local operators to bid together in the auction, which is due to be completed by June.

"We may go together," Francisco Gil, head of Telefonica in Mexico, told reporters. "There could be a consortium."

Telmex owns nearly all Mexico's telephone cables and even the copper wire leading into homes, giving it a powerful hand against smaller companies eager to offer phone or Internet services, but which need access to infrastructure.

Telmex has 80 percent of the fixed-line market in Mexico while America Movil, also controlled by Slim, has more than 70 percent of the wireless market.

(Reporting by Tomas Sarmiento; Editing by Richard Chang)