Televisa-Martínez venture buys AT&T Mexico business to challenge Slim in telecoms

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Televisa-Martínez buys AT&T Mexico

Highlights

AT&T sold its Mexico business, generating $4.4 billion annual revenue, to a Televisa-Martínez venture for $2 billion after a $10 billion investment over 12 years.
Televisa will leverage this acquisition to pursue a quadruple-play service strategy in Mexico, adding mobile to its broadband, fixed-line, and pay TV offerings.
AT&T's exit and persistently thin margins highlight the challenges of breaking Slim's telecom dominance, with new owners likely to pursue consolidation over aggressive price competition.

Acquisition sets up a new telecoms challenger

As reported by the Financial Times, Martínez and Televisa have committed a combined $2 billion for AT&T’s former Mexico business, a company with $4.4 billion in annual revenue after more than a decade of investment by the U.S. group.

The transaction strengthens Martínez’s long-running push into telecoms. The Monterrey-born investor, who owns Fintech Advisory and also holds a large stake in Telekom Argentina, already has experience competing with Carlos Slim’s businesses in South America.

Deal watchers describe the rationale in three parts. First, they see the purchase price as low for an operator that has invested more than $10 billion over 12 years, while AT&T has faced shareholder pressure for years to focus on its core operations.

Second, the acquisition allows Televisa to broaden its service bundle by adding mobile to broadband, fixed-line and pay TV offerings. That creates a potential quadruple-play strategy in Mexico, while Slim remains shut out of pay TV by regulators.

Third, Martínez is not entering the battle without precedent. Telekom Argentina, a former state incumbent in which he is a major shareholder, is already competing with Slim’s Claro.

Market impact highlights Mexico’s telecom gap

Mexico still lags other major economies in telecom infrastructure, according to Jorge Fernando Negrete, founder of Digital Policy and Law Group. He says the country is only now beginning the process for a dedicated 5G spectrum auction, while research company Ookla ranks average mobile download speeds at 47.7 Mbps, placing Mexico 81st in the world.

Even so, building a credible rival to Slim remains difficult. Large operators including Spain’s Telefónica have struggled to gain meaningful market share, and Televisa has also faced challenges in earlier attempts to expand its telecoms presence.

AT&T’s Mexican unit also arrives with thin profit margins, which may limit the scope for an immediate price war. Ernesto Piedras, director of the Competitive Intelligence Unit in Mexico City, says the new owners are more likely to focus first on consolidation and customer loyalty than on aggressive discounting.

For Mexico, the sale marks another retreat from the reform-era ambition that drew AT&T into the market under former president Enrique Peña Nieto. The U.S. group’s exit signals how hard it remains to loosen Slim’s hold on one of the country’s most strategically important industries.

We have also analyzed how market-based disinvestment has driven most of the Centre’s proceeds, with strategic sales playing a limited role.

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