UPDATE 2-Televisa, Telefonica team up on Mexico fiber bid

Fri Mar 19, 2010 11:48am EDT

* Telefonica, Megacable join Televisa in fiber optic bid

* Government auction of fiber seen boosting competition

* Slim's Telmex targeted for more competition (Adds background on auction, byline)

By Robert Campbell

MEXICO CITY, March 19 (Reuters) - Mexican media group Televisa (TLVACPO.MX), Spain's Telefonica (TEF.MC) and Mexican cable television company Megacable (MEGACPO.MX) plan to jointly bid for fiber optic cable capacity to be auctioned off by Mexico's government.

Televisa said on Friday the three companies would hold equal stakes in the joint venture bidding for two fiber optic strands being tendered by Mexico's state power monopoly.

The auction is designed to improve competition in Mexico's fixed-line telecommunications sector, which is dominated by tycoon Carlos Slim's Telmex TELMEXL.MX.

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

"This new fiber optic network will represent for Televisa, Telefonica and Megacable, and also for third parties, an alternative to access data transportation services, increasing competition in the Mexican telecommunications market," Megacable said in a separate statement.

A senior Telefonica executive said earlier this month that the company was considering a joint bid with Televisa. [ID:nN08200975]

On Thursday, Mexico's government said it was taking steps to fine Telmex, which has a market share of about 80 percent in Mexico's fixed-line market, for impeding smaller competitors from connecting to its network.

Televisa, Mexico's top broadcaster, is best known for its soap operas, but has been expanding into telecommunications.

The company announced in February that it had agreed to pay $1.44 billion for a 30 percent stake in mobile phone operator Nextel Mexico, a unit of NII Holdings Inc NIHD.O. (Reporting by Robert Campbell; Editing by Derek Caney)