March 7, 2012 / 11:50 PM / in 6 years

MVS says Mexico rejected $340 million for spectrum

* Company, government clash over spectrum

* Bandwidth has potential for vast telecom services

By Cyntia Barrera

MEXICO CITY, March 7 (Reuters) - Mexican media company MVS Comunicaciones said on Wednesday it had offered to pay the government $340 million to keep nearly three quarters of broadcast spectrum it is fighting to stop from falling into the hands of rivals.

MVS, holder of 190 megahertz (MHz) of lucrative bandwidth that has been dormant for several years, is being circled by rivals, including broadcaster Televisa.

MVS vice-president Jose Antonio Abad told Reuters that in their latest proposal to the government, submitted in November, they offered to pay $340 million to keep 140 MHz of the spectrum, and use it for an initial period of 10 years.

“We had investment commitments to cover the first (money) requirements of more than $450 million,” he said.

The government rejected the bid, but has not given details of how much money MVS had offered.

The MVS chunk of spectrum is the sum of 42 licenses granted by the government to MVS in the past, some of which have expired, making it impossible for the company to build a nation-wide network unless the government renews those permits.

MVS pitched a plan in April 2011 to use the spectrum more efficiently by making it available to almost any player via a joint venture for a high-speed network that included Clearwire, chip maker Intel and Alestra and others.

With MVS, they would have jointly invested $400 million, but plans fell through mid-last year . Abad said the companies were still seeking to find a way of making the plan work.

He said the MVS proposal included returning a 50 MHz block of the capacity so that the government could re-auction it.

The ministry rejected the proposal, saying “the price was too low ... and that they were at risk of being accused of giving away the bandwidth for pennies,” Abad said.

Mexico’s communications and transport ministry said last week that it had not renewed MVS’ expired licenses, about 15 percent of the company’s holdings. The rest of the licenses will continue to expire through 2018.

Abad said he was skeptical the company could reach an agreement with the government on keeping the spectrum soon.

Previous estimates by Mexico’s finance ministry, in charge of determining the amount MVS should pay to keep the whole 190 MHz spectrum, put tags of up to 39 billion pesos, or around $3 billion, an amount MVS said it could not possibly pay.

The ministries were not immediately available for comment.

The MVS spectrum could make room for at least two companies the size of tycoon Carlos Slim’s Telcel, the commercial brand of America Movil, which currently has 66 million mobile clients in Mexico, and allow for many other data-intensive uses.

With little hope left that the problem may be resolved during President Felipe Calderon’s administration -- he leaves office in December -- MVS has already started talks with the presidential hopefuls of Mexico’s three main political parties.

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