June 12, 2012 / 9:18 PM / 7 years ago

Mexico's Iusacell to enter deal with Spain's Telefonica

MEXICO CITY (Reuters) - Mexico’s Iusacell said on Tuesday it will announce a deal with Spain’s Telefonica, an agreement that takes place as the Mexican cellphone company waits to learn whether regulators approved the sale of half of the firm to broadcaster Televisa.

The deal with the Spanish company will be made public at a press conference in Mexico City on Wednesday morning, Iusacell said in a release.

Officials at Iusacell and Telefonica (TEF.MC) declined to comment further on the agreement. CNN Expansion website said the deal could include sharing telecommunications infrastructure.

Iusacell holds less than 5 percent of the Mexican mobile phone market but Telefonica is the No. 2 player, with a share of over 20 percent. Tycoon Carlos Slim’s leading company America Movil (AMXL.MX) holds about 70 percent.

Earlier this month, Vodafone (VOD.L) and Telefonica’s unit O2, said they were sharing infrastructure to boost coverage and to speed up the availability of a fourth-generation network in Britain.

The deal between Iusacell and Telefonica in Mexico could follow this example and give the telecommunications companies ways to meet the rising cost of keeping pace with technological advances and customer demands.

A tie-up between Iusacell and Telefonica would also strengthen their ability to compete against Slim, the undisputed provider of mobile, fixed-line and Internet services in Mexico and the world’s richest man.

PENDING DEAL

Televisa bid $1.6 billion for half of Iusacell in 2011 but the transaction was initially blocked in a 3-to-2 vote in January.

Mexico’s Federal Competition Commission killed the plan because of concerns about an alliance between Televisa’s boss Emilio Azcarraga and fellow TV mogul Ricardo Salinas, who owns No. 2 broadcaster TV Azteca (AZTECACPO.MX) as well as Iusacell.

After Televisa and Iusacell requested a review of the transaction, regulators voted the deal a second time last Wednesday. However, the decision will not be made public until this week.

In 2010 Televisa, Telefonica and cable company Megacable (MEGACPO.MX) bid for and won two dark fiber strands being sold by Mexico’s power company. Iusacell withdrew from the auction after it rejected the tender terms.

Reporting By Cyntia Barrera Diaz; Editing by Bernard Orr

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