MEXICO CITY -- When Televisa announced plans to acquire a 50 percent stake in wireless operator Iusacell, it shook up Mexico's business circles. It also represented a realignment led by the two titans of the broadcasting sector, which is expected to bring stronger competition to the wireless sector.
The sector is, of course, dominated by Carlos Slims America Movil, which operates under the Telcel brand and holds a 70 percent market share. Telefonica's Movistar brand holds approximately 20 percent, while Nextel and Iusacell split the rest. "This isn't what you'd call true competition," says Ernesto Piedras, director of The Competitive Intelligence Unit, a research and consulting firm, in Mexico City.
Interestingly enough, it pairs two companies that otherwise are fierce rivals. Televisa's main broadcast rival is TV Azteca, owned by Grupo Salinas, which also owned all of Iusacell.
Televisa is the world's largest Spanish-language media company, with holdings in broadcast (including Mexico's largest TV company), TV production (including world-famous soap operas), direct-to-home satellite services, cable TV and telecommunication services, magazine publishing (including flagship Vanidades) and distribution, radio production and broadcasting, professional sports and live entertainment, and feature-film and video game production and distribution.
"Companies like Televisa and TV Azteca, they think, 'I'm good at producing content, but I want to hold some control over the distribution,'" says Nymia Almeida, senior analyst with Moody's in Mexico City. "Mobile is the future. That's another channel of distribution that they want to hold control of."
The deal, which is pending approval by Mexico's competition commission, allows Televisa to expand on its current "Triple Play" offerings of cable...