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Speculation over Telefonica-Iusacell takeover intensifies

30 Jul 2014

Spanish telecoms group Telefonica has confirmed that it is in talks with an unspecified company over a possible takeover deal, with industry insiders pointing to Mexican mobile operator Iusacell as the likeliest candidate. The Spanish firm, which already has a presence in Mexico through its Movistar Mexico unit, made the announcement in a brief statement to Spain’s stock market regulator, in response to persistent media reports about a possible acquisition of Iusacell. Just hours earlier, Spanish website El Confidencial – citing unnamed sources close to the talks – reported that Telefonica had agreed a EUR3 billion (USD4 billion) deal for Iusacell.

TeleGeography notes that the Mexican mobile sector is currently in a state of flux, with America Movil (AM)-backed mobile market leader Telcel recently revealing plans to combat tough pro-competition laws by divesting sufficient assets to reduce its market share below 50%. According to TeleGeography’s GlobalComms Database, as of 31 March 2014 Telcel controlled 70.6% of the Mexican mobile market, which will effectively give the eventual buyer a healthy 20% market share from the get-go; while no concrete buyers have yet been named, US telco AT&T is thought to be in the frame. At the same date, Movistar claimed an 18.6% slice of the pie, compared to Iusacell’s 7.9% market share. Market minnow Nextel brought up the rear with a meagre 2.9% slice.

Additional competition within the sector comes from mobile virtual network operator (MVNO) Virgin Mexico, which launched in June. Bloomberg has reported that the reseller – which piggybacks on Movistar’s network – signed up 100,000 users within its first month of operation. Going forward, Virgin aims to notch up one million customers within its first year of operation. To date, Mexican MVNOs have been fairly inauspicious: fixed line operator Maxcom had fewer than 40,000 MVNO accounts at the end of March 2014, while Megacable is believed to have only a small number of customers.

Mexico, Iusacell (inc. Unefon), Telefonica, Telefonica Moviles Mexico (Movistar)

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