NII Holdings, Inc. (NASDAQ:NIHD)
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An official of mobile phone operator Nextel Mexico said Wednesday he's confident the remaining legal challenges keeping the government from handing over wireless spectrum that the company won in a July auction will be defeated.
Nextel Mexico, the local unit of NII Holdings Inc. (NIHD), teamed up with media conglomerate Grupo Televisa (TV, TLEVISA.MX) to bid for a nationwide band of 30 megahertz, with which the company plans to invest more than 19 billion pesos ($1.52 billion) over five years to build a third-generation network. Televisa, the country's largest broadcaster and pay-TV provider, plans to take a 30% stake in Nextel Mexico for $1.44 billion.
Spectrum caps set by the country's antitrust regulator meant that the Nextel-Televisa consortium secured the spectrum with the minimum bid of MXN180.3 million, while other operators bid several billion pesos for smaller blocks. Nextel-Televisa will pay MXN18 billion for the spectrum over the 20-year life of the concession.
Gustavo Cantu, Nextel Mexico's corporate vice-president, said at a press conference that of around 70 lawsuits filed against the auction, 68 have been unsuccessful and he expects one other one to also be defeated. The vast majority of the lawsuits against the auction, which opponents argue unfairly favored the Nextel-Televisa group, were filed by Grupo Iusacell, a small mobile operator which also won additional spectrum.
Nextel said the lawsuits, rather than seeking to defend legitimate interests, are aimed at obstructing competition in telecommunications. "We can't see any reason that a process that is so important for Mexico should continue to be delayed," Cantu said. Iusacell, which is among the companies controlled by businessman Ricardo Salinas Pliego, had no comment on the dispute.
Mexico's biggest mobile phone service provider, America Movil (AMX, AMX.MX) unit Telcel, and the second-largest operator, Spain's Telefonica (TEF) also won spectrum in the auction.
The spectrum caps were put in place by antitrust regulators who had hoped to drum up more competition in Mexico's mobile market, although the ideal goal of enticing a new player into the arena failed, and a second nationwide block of 30 megahertz went unassigned.
Cantu said the fact one operator can delay such a process for months sends a discouraging message to potential investors.
"I think the foreign investor cmmunity is watching this process carefully, as an indicator of what to expect in Mexico," he said. "If this tender process is brought down, or continues to be dragged out because of one operator, even though it's government policy to promote the telecommunications sector, what confidence are we going to generate in foreign investment?"
-By Anthony Harrup, Dow Jones Newswires; (5255) 5980-5176, firstname.lastname@example.org