(Updates with possible seller in final paragraph.)
Aug. 15 (Bloomberg) -- Grupo Televisa SAB completed its purchase of Cablecom SA, extending its lead over Mexico’s pay-TV business just as the nation’s regulator begins reviewing the market power of companies in the industry.
The transaction was carried out through a previously agreed-upon convertible debt exchange of a 95 percent stake in Tenedora Ares SAPI, which owns 51 percent of Cablecom, and a payment of 8.55 billion pesos ($654 million), according to a filing yesterday. The acquisition gives Televisa at least 840,000 new video customers, adding to the 8.9 million subscribers it already serves through cable and satellite units -- the most in the nation.
Earlier this year, Mexico’s telecommunications regulator declared Televisa dominant in the broadcast industry, where it gets about 70 percent of the nation’s viewers. While the agency didn’t rule on the pay-TV market, a new law requires it to begin studying this week whether any companies have “substantial power” in the pay-TV market -- a less severe legal term than outright dominance.
Another provision in the new law lets companies acquire competitors without prior regulatory approval as long as their combined market share doesn’t exceed 20 percent of the telecommunications industry.
“The company could be accelerating its consolidation moves in the cable-TV industry in Mexico,” Gregorio Tomassi, an analyst at Banco Itau BBA, said in a note yesterday. “As long as there is a preponderant player in the telecom sector, Televisa can continue to buy cable-TV players without the regulator’s authorization.”
Cablecom, one of the few large, independent pay-TV providers left in Mexico, will help Televisa compete against America Movil SAB, which holds about 22 million of Mexico’s phone and Internet connections, compared with Televisa’s 3 million. Unlike Televisa, which can package its voice and data services with television, America Movil isn’t allowed to compete in Mexico’s pay-TV market under the terms of its operating license.
Shares fell 0.6 percent to 95.42 pesos at 8:53 a.m. in Mexico City trading, after closing at an all-time high of 96 pesos yesterday, before the Cablecom acquisition was announced. Televisa has gained 21 percent this year on optimism that new laws designed to stimulate competition will boost growth.
Mexico’s pay-TV market grew about 12 percent in the first quarter of the year, according to the latest data from the Federal Telecommunications Institute. Megacable Holdings SAB is the biggest TV provider after Televisa, with about 2.2 million subscribers, or about 17 percent the market.
Televisa didn’t disclose in its statement who the seller of the Cablecom stake was. Excelsior newspaper reported last year that Fintech Advisory Inc., the investment firm founded by David Martinez, had bought Cablecom. A Televisa press official didn’t immediately reply to a request for comment, and Fintech representatives didn’t immediately respond to a phone message.