2nd UPDATE: Mexico's MVS Plans Broadband Deal With Clearwire
November 27 2009 - 05:53PM
Dow Jones News
Mexican communications firm MVS Comunicaciones has reached a
preliminary agreement with Clearwire Corp. (CLWR) and Intel Corp.
(INTC) to invest $700 million in a wireless broadband network
covering 23 cities, a top company official said Friday.
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