Mexican broadcast giant Grupo Televisa looks set to enhance its competitive edge against America Movil, which controls the dominant fixed line and mobile network operators in Mexico, after agreeing to acquire a 50% stake in Iusacell. According to Bloomberg, Televisa will pay around USD1.6 billion for the stake, subject to receiving regulatory approval for the deal, with USD1.57 billion paid for debt convertible into Iusacell equity in addition to a direct cash payment of USD37.5 million. Further ahead, Televisa has also agreed to pay an additional USD400 million to Iusacell shareholders if the cellco’s earnings before interest, tax, depreciation and amortisation (EBTIDA) reach a cumulative USD3.47 billion between January 2011 and December 2015. Commenting on the deal Carlos Madrazo, Televisa’s investor relations officer, noted however: ‘We’re not paying for the cash flows, so don’t try to look at this from an EBITDA multiple … We’re buying into the spectrum, we’re buying into the network, we’re buying into the customer base and we’re buying into the strategic value of this business to us.’
While Televisa will gain from the purchase in gaining access to mobile voice services that it can add to its existing triple-play bundles, Iusacell for its part will benefit from the funding, having filed for a pre-arranged bankruptcy in December 2010. According to TeleGeography’s GlobalComms Database, at the end of 2010 Iusacell had an estimated 3.9 million subscribers, giving it a market share of just 4.3%, far behind the 70.4% held by market leader Telcel.