(Updates with comment from Clearwire.)
By Ken Parks
Of DOW JONES NEWSWIRES
MEXICO CITY (Dow Jones)
Felipe Chao, MVS vice president of institutional relations, said in a telephone interview that a formal joint-venture deal hinges on the Communications and Transportation Ministry renewing the company's spectrum licenses in the 2.5GHz band in about eight cities, including the key markets of Monterrey and Guadalajara.
"We also have to go out and find the $700 million. Not everyone has that lying around in a drawer," said Chao, who declined to go into further detail on how the partners plan to structure and fund the project.
"Clearwire is a minority shareholder in MVS, and their announcement is independent of our plans to cover up to 120 million people [in the U.S.] by the end of next year," Clearwire spokeswoman Susan Johnston said in an email.
Intel didn't immediately respond to an email seeking comment.
BBVA Bancomer telecom analyst Andres Coello said in a report late Thursday that he expects the authorities to renew the frequencies given MVS's commitment to rolling out its network.
"In any case, we should note that this is the No. 1 risk facing the project, and may potentially delay it," he wrote.
Clearwire--whose strategic investors include Intel, Comcast Corp. (CMCSA, CMCSK), Sprint Nextel Corp. (S), Google Inc. (GOOG) and Time Warner Cable Inc. (TWC)--provides high-speed Internet in 24 markets in the U.S.
If the licenses are renewed, MVS and its partners hope to start deploying a network using WiMax technology during the second half of 2010, with commercial service starting in several cities during the fourth quarter, Chao said.
MVS currently provides publishing, radio, restricted television and wireless broadband services. It's also the majority partner in Dish Mexico, a satellite-TV venture with EchoStar Corp. (SATS).
Competition from Dish forced Mexico's largest satellite-TV provider, Sky Mexico, a unit of media giant Grupo Televisa SAB (TV), to offer its own low-cost package earlier this year.
Should they come to fruition, MVS's broadband ambitions would be a direct challenge to fixed-line incumbent Telefonos de Mexico SAB (TMX), the country's biggest Internet service provider with 6.3 million broadband accounts at the end of September.
Telcel, the country's No. 1 mobile operator and a subsidiary of wireless giant America Movil SAB (AMX), has also invested heavily to upgrade its network in recent years to offer high-speed data services.
A new wireless broadband competitor would also put greater pressure on small phone companies such as Axtel SAB (AXTEL.MX), which is rolling out its own WiMax network, and cable TV companies that are slugging it out with Telmex in the phone and Internet markets.
"We believe MVS will follow the same strategy that led to Dish's success: offering a good service for a price substantially lower than the competition," BBVA Bancomer's Coello wrote.
-By Ken Parks, Dow Jones Newswires; 52-55-5980-5177; ken.parks@dowjones.com