Telefónica considers entering Mexico's pay-TV arena

DetailsJuan Fernandez Gonzalez | 11 February 2015

After Francisco Gil Díaz, Telefónica's Mexico president, described the current situation of the country's telecom market as being "upside down," the telco is considering buying a cable company in order to enter the pay-TV market and take on intensifying competition from AT&T and América Móvil.

In an interview with the Financial Times, Díaz said that no decision has been made, but fast action is needed. "It is not that they are not aware of what is happening, but things are moving so fast and so unexpectedly that I don't think they have reached a decision on what to do," said the telco's president in the country.

After huge investments in recent years - over $13 billion - and revenues on the up by the end of Q3 2014, Telefónica found itself in a comfortable situation as a second-line player in a market dominated by América Móvil.

Carlos Slim's telco also has an ally in AT&T, a player who wasn't so big in Mexico until few months ago. After buying Iusacell and Nextel during the last quarter of 2014, the US telco achieved a solid position in the mobile market; and after acquiring DirecTV it will have a dominant place in the pay-TV sector.

Telefónica and Televisa - América Móvil's main pay-TV competition - may also be considering an association to enable them to be more competitive.

"There is a need for Televisa to make a decision, just like us, on whether we are to combine resources," Díaz said. "The plan to have a merger of some of Televisa's assets and some of ours did not work out. There is still a possibility to work with Televisa in different ways."