Mexican regulators do not disclose decision on Televisa’s Iusacell purchase; newspaper says they rejected it

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The Mexican Federal Competition Commission (Comisión Federal de Competencia – CFC or Cofeco) decision on broadcaster Televisa’s plan to acquire half of cell-phone company Iusacell will not be disclosed until February 7. After a six-hour closed-door meeting on Tuesday (January 24) afternoon, Mexican regulators said they have reached a decision, which its officials cannot comment on until the companies involved are notified.

However, the local newspaper El Universal reported that CFC has rejected the broadcaster Televisa’s plan, and added that the Federal Competition Commission’s board voted 3-2 against the deal, citing unnamed sources close to the process. The companies will be able to ask the agency to review its decision, the newspaper said.

On the other hand, another local press Proceso said the deal was approved with unspecified conditions.

The country’s biggest broadcaster agreed last April to invest US$1.6 billion for a 50% stake in Iusacell, but now the deal is under scrutiny by competition regulators.

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During the CFC’s analysis on approvals, regulators have requested more information from Televisa and Mexico’s number three operator Iusacell to get a better grasp of what their tie-up would mean for the country’s telecommunications sector.

Ricardo Salinas’ Iusacell affiliate TV Azteca is Mexico’s No. 2 broadcaster behind Televisa. Together, they control nearly all of the over-the-air television market in Mexico.

Aleida Calleja, president of the Association for the Right to Information, said that a decision in favor would enable both firms to compete in the mobile telephone market, ruled by Telcel Company.  The basic argument has been that such merger violates the constitutional article 28, which prohibits monopolies, as well as the Federal Competition Law.

On the other hand, if approved, some specialists point out that it would be another milestone in the ongoing disputes. Televisa-Iusacell could create a stronger competitor in the phone market, which today is dominated by Carlos Slim’s fixed-line and mobile phone companies Telmex and Telcel.

Francisco Borrego, chief legal counsel for Ricardo Salinas, Iusacell’s owner, said the operator could disappear if the investment doesn’t take place.

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