Mexican broadcaster Grupo Televisa announced a deal that will see it taking a 50 percent stake in Iusacell, the number three operator in the country.
According to the Financial Times, the deal sees Televisa aligning with television rival TV Azteca, which, like Iusacell, is controlled by businessman Ricardo Salinas Pliego.
Televisa and existing Iusacell shareholders will have “equal corporate governance” rights of the business.
The move was seen as a challenge to Carlos Slim’s America Movil, which is a dominant presence in the Mexican telecoms market.
Televisa said its investment will be used to “strengthen Iusacell’s capital structure, finance future capital expenditures, and launch new and better services.”
In a statement, Televisa said that: “Iusacell is a well positioned mobile operator with an extensive national network.
This transaction will strengthen Iusacell’s balance sheet, allowing it to make the necessary investments to properly compete in this industry, therefore improving the quality and availability of mobile service offerings in the market.”
Televisa is to invest US$37.5 million in Iusacell stock and US$1.57 billion in convertible debt, which when converted will give Iusacell its 50 percent stake.
Televisa will also pay an addition of US$400 million if Iusacell’s cumulative EBITDA reaches US$3.47 billion at any time before 31 December 2015.
Televisa had previously been eyeing a mobile partnership with Nextel, the smallest player in the market, although this was aborted in October 2010.
Both Iusacell and Nextel are dwarfed by Slim’s Telcel and Telefonica’s Movistar.