Mexican Televisa announced that they have entered into an agreement with Spanish Telefonica S.A. (ADR) (NYSE:TEF).
Benefits to the consumers
The agreement involves providing customers with cheaper access to the contents carried on the digital site, Blim. Under the agreement, Grupo Televisa SA is able to compete with America Movil SAB de CV, a Carlos Slim’s telecom company which also has a Telcel mobile unit that gives its subscribers access to offerings on entertainment by the Slim’s Claro digital video service. The terms of the agreement allows subscribers to the Telefonica’s local unit, Movistar to have access to contents on the Televisa’s Blim site at considerably preferential rates.
Total acquisition investments
Telefonica has invested a whooping $13.5 billion in the Latin America’s second biggest market in the last 12 years. This has translated to increased revenues by about 9.5% as reported in the third quarter. The company has not yet decided what to do amid the intensifying competition from new rivals in the market. The Mexican president of Telefonica, Gil Diaz commented that the current situation is upside.
Telefonica has reported negotiating a $10.25 billion in its U.K. branch with Hutchison Whampoa of Hong Kong. The company has also been busy in Brazil where it’s Vivo branch is just settling after acquiring GVT a broadband enterprise from Vivendi for $7.5 billion. It is also reported that the company is eying TIM from Italy.
Diaz stated, “It is not that they are not aware of what is happening but things are, moving so fast and so unexpectedly.” He adds that he doesn’t think that the company has settled on the final decision.
Market share in Mexico
Telefonica has only about 20% market share. It has for a long period played second fiddle in the Mexican market after Carlos Slim’s Telcel. Iusacell has the third position with 8% and was recently snapped up by AT&T Inc. (NYSE:T).
The situation is changing in Mexico with the introduction of a bill that is designed to open more doors for competition. This has been embraced very fast with changes taking effect rapidly. Mr Diaz state that Televisa need to make up their mind if to join forces with the Spanish telecoms giant.
The stock of Telefonica closed $10.90 on April, 21 after a fall $0.09 or 0.77%.