BARCELONA Nov 21 Spanish telecom group
Telefonica on Thursday said it is open to mergers,
acquisitions and deals to share networks in Mexico, where it
lags far behind former monopoly and arch-rival America Movil
The company, one of Europe's most heavily indebted telecoms
operators, this month said it had already met its target to cut
debt below 47 billion euros ($62.9 billion) by year-end and had
now regained financial firepower.
It has scaled down its operations by selling non-core assets
in Europe and Latin America and now aims to focus on developing
its business in key markets such as Spain, Germany, Britain,
Brazil and Mexico.
"We are very open minded to consolidation in Mexico," said
Telefonica Chief Operating Officer Jose Maria Alvarez-Pallete at
the Morgan Stanley annual technology, media and telecoms
conference in Barcelona.
"Consolidation might happen not just in terms of merging,
but also roaming or network sharing," Alvarez-Pallete said. "We
remain committed to the Mexican market, one of our top five. We
are open to deals or consolidation, since we think it makes
sense and the timing is right."
Telefonica currently controls 20 percent of the Mexican
mobile market and has been exploring a series of options to
challenge America Movil, owned by the world's richest man Carlos
Slim, and which has a market share of 70 percent.
It signed roaming agreements with smaller competitors Nextel
and Iusacell last year. It is also pushing on with a new
strategy to overhaul its operations in Mexico in the hope it
will cut its reliance on Brazil.
Telefonica earlier this month backed an overhaul of Telecom
Italia's finances in what sources said was a bid to
stabilise the company and prepare the sale of its Brazilian unit
from the second half of 2014 onwards.
Telefonica Chief Financial Officer Angel Vila said the group
was fully supportive of Telecom Italia's new head Marco Patuano
and had been impressed by his work since he took the helm of the
company six weeks ago.
Patuano's plan includes a 1.3 billion euro mandatory
convertible bond, an upgrade of the company's Italian networks
to combat fierce competition, and a sale of its Argentina
business and mobile towers to cut debt.
"We think the new strategy will create value for Telecom
Italia shareholders and we are the biggest one of them," Vila
said, adding that Telefonica had no plan to take its indirect
stake in Telecom Italia beyond 14 percent, a level which it does
not see as a controlling one.
Italian lawmakers recently discussed the possibility of
lowering the threshold for obligatory takeovers to 15 percent
from 30 percent.
Vila said that even if the Italian partners wanted to exit
their investments in Telecom Italia's holding company Telco, the
structure of a late September deal between them and Telefonica
means that the Spanish group could not be forced to launch a
full takeover bid for Telecom Italia.
Vila said if the Italian partners wanted out at a later
date, Telefonica could choose whether or not to buy them out. If
the Italian partners were to exit and Telefonica does nothing,
its indirect stake in Telecom Italia would not go beyond 14
"We have not put ourself in control position. We cannot see
any reason why we could be, in the current situation, required
to make an offer on Telecom Italia," Vila said.