Iusacell could ‘disappear’ if investment from Televisa is ruled out

16 Jan 2012

Should Mexican antitrust officials reject proposals put forward by mobile network operator Iusacell to accept an investment from local broadcast giant Grupo Televisa, the former may ‘disappear’, according to Francisco Borrego, chief legal counsel for Ricardo Salinas, who controls the cellco. Amid speculation that antitrust authority the Comision Federal de Competencia (Cofeco) may block Televisa’s planned USD1.6 billion investment in Iusacell, Bloomberg cites Mr Borrego as saying: ‘If Iusacell doesn’t receive a large investment, it will little by little lose its ability to pay its debts … If they don’t attend to us, Iusacell could disappear.”

As previously reported by CommsUpdate, in April 2011 Televisa announced that it had agreed to acquire a 50% stake in Iusacell; the media giant said it would 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. While Televisa is expected to benefit from the purchase in gaining access to mobile voice services that it can add to its existing triple-play bundles, Iusacell for its part is likely to benefit from the funding, having filed for a pre-arranged bankruptcy in December 2010.

Mr Borrego, having claimed there are no legal grounds for rejecting the deal, did note that Cofeco has not given any official indication that it will say no to the plans, although he did state that the two companies believe the law requires that the competition watchdog must approve the deal by 7 February 2012.

Mexico, Iusacell (inc. Unefon)