Televisa’s AT&T Mexico deal boosts its challenge to America Movil

Mexico City, October 14 - Shares of Televisa soared on Wednesday following the Mexican broadcaster's announcement that it would acquire AT&T's Mexican unit. The move, endorsed by investors, is anticipated to set the stage for a competition with telecom giant America Movil. If finalized, the acquisition would substantially enhance Televisa's telecommunications presence, with Scotiabank analysts projecting its share of Mexico's fixed and wireless subscribers could nearly double from 8% to 19%.

This increased scale would strengthen Televisa's position in a market currently dominated by America Movil, which is controlled by the family of Mexican billionaire Carlos Slim. Nonetheless, analysts have cautioned that integrating the newly acquired business and competing in Mexico's expensive, fiercely contested telecommunications industry may temper the benefits of the deal.

The $2 billion acquisition, completed in partnership with privately held Fintech Holdings, prompted shares to rise by approximately 5% at 1555 GMT. The transaction is slated to be finalized in the first quarter of 2027, and investors are not expected to anticipate substantial gains until the combined entity demonstrates positive results.

The valuation assigned to the deal represents a notable discount compared to similar telecom companies in Latin America. However, the acquisition comes with certain execution risks, according to Santander analysts, who highlighted that value creation will primarily stem from revitalizing AT&T Mexico's operations, which have historically faced challenges such as low margins.

Additionally, building out a convergent fixed-mobile offering is expected to be a complex task. Santander analysts indicated that minimal immediate impact on America Movil is anticipated, given its extensive scale and dominant market position. Conversely, Scotiabank posited that the deal could heighten competitive pressure since the relatively low purchase price may enable Televisa and Fintech to allocate more resources towards network investments.