--Alliance aims to make better use of investments, avoid
duplication
--Two operators team up to compete with America Movil unit
Telcel
--Spectrum management, commercial operations to remain
separate
By Anthony Harrup
MEXICO CITY--The Mexican unit of Spanish phone company
Telefonica SA (TEF) and Mexican mobile operator Grupo Iusacell have
teamed up in an infrastructure-sharing agreement with which the two
hope to gain an edge in their ongoing competition with the
country's largest wireless operator, America Movil SAB (AMX,
AMX.MX) unit Telcel.
Juan Abellan, the executive president of Telefonica Mexico,
likened the agreement signed Wednesday to one the Spanish
telecommunications giant reached recently in the U.K. with Vodafone
Group PLC (VOD.LN), saying that network sharing is the future of
telecommunications.
Iusacell and Telefonica, which operates in Mexico under the
Movistar brand, will maintain independent spectrum and commercial
operations.
Company officials said that the agreement will benefit their
combined 27 million wireless subscribers in terms of coverage and
network quality. Telefonica, which has over 20 million subscribers
and a 22% market share, plans to invest between $800 million and $1
billion this year in network expansion, Mr. Abellan said.
Iusacell Chief Executive Adrian Steckel said Iusacell is
investing between $500 million and $600 million between now and the
end of 2013.
"Neither Telefonica nor we are lowering our investments because
of this agreement, rather we're doing things that we wouldn't be
able to do," he said. "There's no reason to duplicate
networks."
The companies compete directly with Telcel, controlled by
billionaire Carlos Slim, which has about 70% of the market with
close to 67 million wireless subscribers at the end of March.
Abellan and Steckel were accompanied at the event by
telecommunications regulator Mony de Swaan, who said the
telecommunications commission doesn't see any regulatory impediment
to the agreement.
The network-sharing agreement comes as Iusacell awaits
notification of an antritrust decision on a plan by broadcast and
media concern Grupo Televisa SAB (TLEVISA.MX, TV) to take a 50%
stake in Iusacell for $1.6 billion. Televisa invested the $1.6
billion in Iusacell last year via low-interest notes, but requires
antitrust clearance to convert the notes to equity.
Write to Anthony Harrup at anthony.harrup@dowjones.com