MEXICO CITY — Mexico’s triple-play market is shaping up to be a clash of the titans.
Mexican media conglom Televisa is expanding its cable holdings into a national network and is engineering the $420 million purchase of phone company Bestel to back up its voice services that were added in July to TV and Internet packages.
Meanwhile, Mexico’s largest cable TV provider, Guadalajara-based Megacable is consolidating its purchase of a smaller rival, giving it 1.2 million subs in total.
Both are bulking up as telco Telmex, the foundation of global mogul Carlos Slim’s empire, prepares to unroll its TV service in Mexico as part of its expansion through Latin America.
Mexico’s cable market, which includes around 200 smaller players, is undergoing a wave of consolidation as companies begin to offer triple-play packages.
Pay TV subs in Mexico are expected to soar from around 5 million today to 15 million in 2012 as competition cuts prices. And Televisa and Telmex can be expected to draw in most of the new business.
But some of Mexico’s smaller cable operators and Megacable are trying to lobby for restrictions on Televisa’s ability to dominate distribution in Mexico. Congress is reviewing media laws that were overturned earlier this year by the Supreme Court and some lawmakers are looking to curb both Televisa and Telmex’s power.
Televisa owns Sky Mexico, Mexico’s only satcaster, which has 1.4 million subs. It also owns 51% of Mexico City-based cable company Cablevision, which has recently obtained conditional regulatory approval to take a 49% stake in Mexico’s second-largest cable operator, Cablemas, as well as a 50% share of Monterrey-based TVI. The two purchases will add nearly 800,000 subs to Cablevision’s 500,000 subs. Combined with Sky, that will give Televisa control of nearly 2.7 million subs or half of the pay TV market — on top of its four national commercial channels, radio, print and Internet divisions.
But for Mexico’s anti-trust agency that’s no problem, because Televisa is actually sort of an underdog here.
Seventeen years after being privatized, Telmex still dominates the local phone market, with more than 90% of landlines. When Telmex begins to offer TV, it will be in a position to gobble up a sizeable chunk of the market.
The head of Mexico’s anti-trust agency, Eduardo Perez Motta, said last week that allowing Televisa to expand “is the most adequate solution” to provide a counterweight to Telmex.
But Slim’s phone giant is still being held up by the government.
Telmex’s concession prohibits it from providing TV services and the government has been unwilling to change that until it ensures that Telmex is playing fair with cable companies that are setting up phone operations.
Meanwhile, Telmex is transforming into a major pan-regional triple-play player, having purchased a string of companies in Brazil, Colombia, Peru and Chile.