Updated Version: The agreement between Televisa and AT&T Mexico strengthens their challenge to America Movil.

UBS commentary supplemented, stock price trend updated

Paolo Laudani

Reuters Mexico City, October 14 - On Wednesday, shares of Mexican broadcaster Televisa (TLEVISACPO.MX) rose after the company announced it would acquire AT&T's Mexican subsidiary (link), a move welcomed by investors that will put Televisa in direct competition with telecom giant America Movil (AMXB.MX).

If the acquisition is completed, it will significantly expand Televisa's presence in the telecom sector. Scotiabank analysts estimate that its market share in Mexico's fixed-line and wireless subscribers will double from 8% to 19%.

The increase in scale will cement Televisa's position in a market dominated by America Movil, controlled by the family of Mexican billionaire Carlos Slim. However, analysts warn that integrating the new business and competing in the costly, highly competitive Mexican telecom sector may restrict the benefits of this deal.

UBS analysts said that by selling bundled service packages and extracting more value from existing customers, Televisa could become a stronger competitor and gain more growth opportunities.

"We believe this deal could be positive for Mexico's telecom sector. Industry consolidation usually encourages companies to focus more on profitability, returns, and cash flow," UBS analysts said.

This $2 billion cash transaction is being carried out together with private company Fintech Holdings, pushing the share price up about 6% at 19:44 GMT.

The transaction is expected to close in the first quarter of 2027. Investors are unlikely to see significant gains until the merged company delivers the expected results.

Execution Risks

Santander analysts wrote in a report that the valuation comes at a significant discount compared to other Latin American telecom companies, but there are execution risks in the acquisition.

"Value creation will depend on turning around AT&T Mexico’s operations—which have historically struggled due to (low profit margins)—and ultimately building an integrated fixed-mobile business... but this could be equally challenging," the report said.

UBS also noted that execution capacity will be one of the challenges the new group faces going forward.

The bank said AT&T Mexico still needs to modernize its networks and increase investment, especially in 5G, and that the success of the deal will depend on whether management can create cash flow while improving the network.

Santander analysts believe the deal will have limited short-term impact on America Movil, given its size and dominant market position.

However, Scotiabank says the deal could intensify competitive pressure since the relatively low acquisition price could allow Televisa and Fintech to invest more capital in network infrastructure.

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