--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
