September 23, 2014 / 3:15 PM / 5 years ago

Telefonica considering Televisa tie-up in Mexico -source

MEXICO CITY, Sept 23 (Reuters) - Spain’s Telefonica is considering a range of tie-up options in Mexico with broadcaster Grupo Televisa, including creating a new telecommunications company together, a person with knowledge of the matter said.

Mexican regulators are using new legislation to try to break billionaire Carlos Slim’s stranglehold on the local telecoms market, and the new rules are expected to fuel a flurry of deals by companies seeking to grow in Mexico.

No. 2 mobile carrier Telefonica has struggled for years to gain a bigger chunk of the market and a partnership could help it convert customers with mobiles on Slim’s network to its own.

“This idea is in play ... It could take lots of different forms,” the source said.

It is studying several options that would allow it to leverage Televisa’s 5.4 million cable video, broadband and voice subscriptions, excluding recently purchased Cablecom, the source said.

These include Televisa creating a mobile virtual network operator (MVNO) on Telefonica’s network, an alliance with Televisa’s cable companies and creating an entirely new company together, the source said.

Any combined company could offer television, broadband, mobile and fixed-line services, known as “quad play”.

A Telefonica spokesman declined to comment, and a spokesman for Televisa did not return a request for comment.

The companies are not yet in formal talks and, before starting any, Telefonica will first decide whether it is interested in pursuing an outright purchase of No.3 carrier Iusacell from billionaire Ricardo Salinas, the source said.

In the coming months the structure of Mexico’s notoriously concentrated telecoms and broadcast sectors could change completely, driven by the government reform.

Slim’s America Movil said it would sell some assets in order to fall below 50 percent market share in telecoms, aiming to bring in a new large foreign competitor.

The telecoms regulator could lift a 24-year ban on Slim’s Telmex fixed-line operation offering television services, if it believes any sale has resulted in genuine market competition.

Telefonica said in July it was in talks over a possible deal in Mexico, with sources saying it had been targeting Iusacell.

A deal with Telefonica is now one of few options open to Televisa it if it wants to continue competing in Mexican mobile.

Earlier this month Televisa, which is Mexico’s largest broadcaster, agreed to sell its 50 percent stake in Iusacell back to Salinas at an overall loss of nearly $900 million.

Ricardo Salinas is now looking for a new strategic partner in Iusacell and said in September he would announce one “soon”. (Reporting by Christine Murray; Editing by Simon Gardner and Meredith Mazzilli)

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