Mexican stand-off? Telefonica official urges group to act fast, or risk being left behind

13 Feb 2015

Francisco Gil Diaz, Telefonica’s regional chairman for Mexico and Central America, has urged the Madrid-based telecoms group to move quickly, or risk being left behind by the wave of consolidation sweeping the Mexican telecoms sector. The recent flurry of M&A activity, which has seen US heavyweight AT&T Inc buy two Mexican wireless operators – Iusacell and Nextel – back-to-back, has left Movistar Mexico looking increasingly vulnerable, with the Telefonica-backed operator’s rumoured tie-up with pay-TV giant Grupo Televisa also collapsing.

In an interview with the Financial Times, Mr Gil Diaz commented: ‘It is not that they are not aware of what is happening [in Mexico], but things are moving so fast and so unexpectedly that I don’t think they have reached a decision on what to do … There is a need for Televisa to take a decision, just like us, on whether we are to combine resources. The plan to have a merger of some Televisa assets and some of ours did not work out. There is still a possibility to work with Televisa in different ways.’

Gil Diaz asserted that an exit from Mexico is not an option, given Telefonica’s USD13.5 billion investment over the last twelve years, and his favoured outcome would see the company move to acquire either independent cableco MegaCable or alternative fixed line operator Axtel. A decision, he added, is likely to be made before the second half of the year.