February 16, 2010 / 3:17 PM / 10 years ago

UPDATE 2-NII Holdings, Televisa eye new 3G network

* New national 3G coverage for Mexico

* Would allow faster delivery of wireless services

* NII stock jumps 6 percent, Televisa flat (Adds Televisa, Soleil comment, byline; updates share prices)

By Cyntia Barrera Diaz

MEXICO CITY, Feb 16 (Reuters) - NII Holdings Inc said on Tuesday it would deploy a new 3G network across Mexico to allow fast wireless access to phone, video and data services, if a planned deal with broadcaster Televisa moves ahead.

Televisa TLVACPO.MX(TV.N) said on Monday it would buy a 30 percent stake in NII’s NIHD.O Nextel Mexico wireless operator as long as their joint bid for new wireless capacity succeeds.

Televisa would pay $1.44 billion for the Nextel Mexico stake. The deal includes an option to purchase another 7.5 percent stake in Nextel Mexico, the country’s No. 4 wireless phone company.

“We plan to develop new services and applications that capitalize on the two companies’ extensive experience in serving customers in Mexico, including plans to deploy a new 3G network throughout the country,” NII Chief Executive Officer Steven Dussek told analysts during a conference call.

Shares of NII Holdings, which did not trade on Monday due to a U.S. market holiday, rose 6.7 percent to $38.49 in mid-morning trading.

A 3G, or third-generation, network would mean a departure from NII Holdings’ iDen technology, which works well for walkie-talkie types of communications, but is not optimal for data transmission.

“We believe the expansion of a 3G network by NII can significantly expand the company’s addressable market and represents substantial upside to our current estimates,” said analyst Michael Nelson from Soleil Securities.

Televisa wants to move into the wireless market, which is dominated by tycoon Carlos Slim’s America Movil (AMXL.MX)(AMX.N). America Movil already offers 3G services in Mexico and other Latin American markets.

Acquiring a stake in Nextel Mexico would let Televisa bundle together fixed-line telephone, wireless, Internet and video services.

Alfonso de Angoitia, Televisa’s executive vice president, said on a separate conference call Tuesday that the broadcaster has established a dividend policy with NII Holdings that would take effect after Televisa buys the stake in Nextel Mexico.

Televisa will also contribute a proportional amount of the management fee that Nextel Mexico pays parent NII Holdings, he added.

The tie-up would be the first by big corporate players as the Mexican government holds long-awaited frequency auctions that are seen leading to a shake-up in the telecommunications industry.

Mexico’s government is auctioning spectrum in the 1.7 GHz and 1.9 GHz bands to propel competition in the cellphone market. Nextel Mexico and Televisa submitted documents this week saying they want to bid together in the auction.

Televisa shares were about flat at 48.60 pesos. (Reporting by Cyntia Barrera Diaz and Tomas Sarmiento; Editing by Lisa Von Ahn and Tim Dobbyn)

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