Finally, Movilaccess bought 73.9% of Iusacell for US$ 10 million. The company controlled in equal parts by Grupo Saba and Grupo Salinas –with stakes in Unefon and TV Azteca- will absorb the liabilities of Iusacell, that total US$ 833 million. The transaction meant the departure of Verizon and Vodafone from the Mexican mobile market, and the reinforcement of a consolidation stage started as from the entrance of Telefónica.

Telcel (América Móvil) keeps a wide leadership, with a market share of 20.8 million clients. Then comes Telefónica, for whom Mexico is the second market in Latin America, following Brazil. The Spanish firm arrived in Mexican ground through Movitel, Bajacel, Norcel, and Cedetel, four operators north of the country. With the acquisition of Pegaso and the consolidation of all its operations, Telefónica reached a total of 2.42 million subscribers.

Until Telefónica¿s arrival, Iusacell was Telcel¿s main competitor. But its operative performance brought about debts the firm was unable to honor. The corporate strategy to overcome the said situation was to focus on post-paid high-consumption clients, rather than on pre-paid. However, service demand follows a pace different from that of financial markets, therefore leading the firm to a virtual default, and resulting in the departure of controlling firms. Iusacell ended 2002 with a turnover of US$ 535 million, 19% lower than the revenues of 2001. Ebitda last year was US$ 174 million (-36%), and losses reached US$ 208 million.

Iusacell purchase grants Grupo Salinas a strong drive for cell operations throughout market segments. Unefon has some 1.5 million clients. Different from Iusacell, most of them correspond to pre-paid clients. The operator is addressing low income users that require no value added services. Now, Movilaccess will take over Iusacell¿s CDMA 1x network in the Federal District, the main market in the country.

According to executives in Grupo Salinas, companies won’t merge but will share commercial and technological agreement. However, a merger in the mid-term is expected. Should this be the case, the new operator will count on a customer base of 3.6 million clients, thus exceeding Telefónica Móviles¿. Nonetheless, Unefon¿s priority is to restructure debts for US$ 325 million with Nortel, after agreeing on a debt reschedule with the equipment supplier, that includes a reduction of US$ 43 million, and the end of legal actions.

Irrespective of the merger, Grupo Salinas is the third party coming in the struggle between Telcel and Telefónica Móviles in a market that, with a 25% penetration, is nearing saturation. The point is whether Grupo Salinas will be ready to compete with two of the biggest cell players in Latin America.

In Mexico, Telefónica wants the lion’s stake. In a meeting held in the official residence Los Pinos, the Director of Grupo Telefónica de España, César Alierta, guaranteed the President of Mexico Vicente Fox that the company will invest some € 1.5 billion in the country in the next two years. Telefónica is also assessing the possibility of making an offer for Unefon, that failed to displace Pegaso among Telefónica¿s preferences.