UPDATE 6-Mexico’s Televisa, Nextel break up partnership

* Televisa wanted a 30 pct stake in Nextel

* Companies pondered risks of moving ahead with deal

* Televisa still eyeing mobile market in Mexico
(Adds comments from Televisa source, updates stock quotes)

By Cyntia Barrera Diaz

MEXICO CITY, Oct 18 (BestGrowthStock) – Broadcaster Televisa and
NII Holdings Inc’s Nextel unit have parted ways, ending a
short-lived venture aimed at tapping the wireless phone market
in Mexico, the companies said on Monday.

NII Holdings shares edged lower, while Televisa gained more
than 1 percent.

The companies had agreed in February to join forces to buy
a chunk of spectrum in a government auction and then deploy
Nextel’s 3G, or third-generation, network that would allow them
to better compete against tycoon Carlos Slim’s America Movil
(AMX.N: ) (AMXL.MX: ), the market leader.

Televisa (TLVACPO.MX: )(TV.N: ) had said it would invest $1.44
billion for a 30 percent stake in Nextel, plus an option to
purchase an additional 7.5 percent.

Gustavo Cantu, Nextel’s vice president, told Reuters that
after reviewing the implications of their joint business, both
companies decided to go separate ways.

“Televisa is a very diversified company and they perceived
other kind of risks… regulatory risks that would reflect on
its other businesses,” Cantu said.

Televisa has broadcast, cable, satellite, publishing, and
gaming businesses and is the main content provider for U.S.
Spanish-language broadcaster Univision (UVN.UL: ), where it
recently announced a $1.2 billion investment.

A Televisa source acknowledged that the companies were
discouraged by a round of recent legal challenges from rivals
against the auction where it and Nextel won spectrum.

Televisa and Nextel received the spectrum license earlier
this month as rivals complained the price they paid for it was
too low. The government says the auction was fair.

On Thursday, a Mexican judge granted an injunction to
mobile phone operator Iusacell, blocking Nextel and Televisa
from using the spectrum.

“Televisa considered it was not a prudent investment,” said
the source, who requested not to be named as it was not
authorized to talk to the media.

Because the two companies mutually agreed on the split,
neither is paying a break-up fee.

NII Holdings and Nextel will continue to work on deploying
a third-generation network across Mexico, with the first phase
of the launch expected to occur in the next 12 to 18 months.

The U.S. company said it and Televisa had agreed to discuss
entering into commercial agreements.

“We remain interested in the opportunity (of the mobile
market) but we will keep our options open that may, or may not
include a deal with Nextel,” the Televisa source added.

Analyst Gray Powell of Wells Fargo said in a report that
while the news is negative, investors had expected the plan to
fall flat.

MOVING AHEAD

Despite the breakup, the news may not be that bad for
either company, analysts have said.

Televisa could still offer mobile phone services using a
model similar to that of cable television company Megacable
(MEGACPO.MX: ), which in August signed a deal to use Spanish
telecom Telefonica’s (TEF.MC: ) network to offer cellphone
service.

The Mexican broadcaster could also sell content to Nextel,
promoting that company’s mobile phone services with its cable
companies and satellite television unit SKY.

NII Holdings has about $2 billion in cash that provide the
funds needed for Nextel’s expansion plans in Mexico.

Some analysts have even suggested that not selling a
minority stake in Nextel to Televisa would ultimately be much
better for NII Holdings.

Market watchers still believe NII Holdings could decide to
put itself up for sale once it completes and consolidates its
3G operations across Latin America. The company has units in
Mexico, Brazil, Argentina, Peru and Chile.

U.S.-traded shares of NII Holdings were down 1.66 percent
at $37.40 on Nasdaq, while Televisa rose 1.52 percent to 55.50
pesos in Mexico.
(Additional reporting by Patrick Rucker, editing by Lisa Von
Ahn, Maureen Bavdek, Dave Zimmerman and Gunna Dickson)

UPDATE 6-Mexico’s Televisa, Nextel break up partnership