Ventura Capital Privado to acquire Mexico's Maxcom for $59M

Will sale be enough to put competitive carrier on solid footing?
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Maxcom Telecomunicaciones, a competitive Mexican wireline service provider, on Wednesday agreed to be bought out by private equity firm Ventura Capital Privado for $59 million.

As reported in Bloomberg, Ventura will pay MXN 2.90 (USD 0.22) per share for Maxcom. The service provider's board and investors, which represent 44 percent of its outstanding stock, have already approved the transaction.

Like other competitors in Mexico, Maxcom has found it difficult to compete against incumbent carrier Telmex, which currently controls close to 80 percent of the country's landline market.

Since 2008, Maxcom has reported a net loss. To date, Maxcom currently has about 366,000 landline customers, while Telmex has 14.4 million lines.

In the process of buying Maxcom, Ventura will launch a public tender for the service provider's shares, and 50 percent of the stock must be offered in order for the transaction to proceed.

"Maxcom has significant potential to continue growing and gaining market share in Mexico," Ventura said in a statement. "With a stronger balance sheet as a result of the potential debt exchange and capitalization, we plan to position the company as a leading niche telecommunications provider in the country."

Analysts, however, are skeptical of Ventura's plan.

Even though Ventura's plan may help Maxcom pay down some of its debt, Alejandro Gallostra, an analyst at Banco Bilbao Vizcaya Argentaria SA (BBVA), told Bloomberg "it will be difficult to use the money both to substantially reduce interest payments and increase network investments."

With Telmex--the Mexican subsidiary of Carlos Slim's America Movil (NYSE: AMX)--enjoying what can be called a quasi-monopoly in Mexico's wireline market, it's no wonder that service providers like Maxcom have struggled to find success.

For more:
- Bloomberg has this article

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