Telefonica in exclusive talks to sell its Mexican unit to Beyond ONE, sources say

By Andres Gonzalez and Amy-Jo Crowley

LONDON (Reuters) -Spanish telecom giant Telefonica is in exclusive talks to sell its Mexican business to Beyond ONE, the owner of Virgin Mobile Mexico, three sources with knowledge of the negotiations said. 

The Spanish company has accelerated plans to reduce its exposure in Spanish-speaking Latin America, where profitability is lower than the cost of capital, and to focus instead on four main markets under new CEO Marc Murtra. 

Telefonica declined to comment. Dubai-based digital services provider Beyond ONE did not immediately respond to requests for comment.

The sources said that a deal was not certain and asked not to be identified because the matter is confidential.

The Mexican business could be worth 520 million euros ($609.28 million), according to a research note published by Kepler Chevreux in June. Beyond ONE acquired Virgin Mobile Latin America, a mobile virtual network operator (MVNO) with clients in Mexico and Colombia, in 2023 for an undisclosed amount.  

One of the sources said the creation of a new antitrust commission - proposed by Mexico - could delay any telecoms deal because it will create uncertainty about getting regulatory approvals. The proposed body would have power over telecoms companies.

Telefonica has said it want to focus on the four core markets of Brazil, Britain, Germany and Spain, with Murtra planning to unveil a new strategy for the company in the second half of this year.

It agreed to sell its Argentina unit to Telecom Argentina for $1.245 billion in February, and is working with advisors for a sale of its business in Chile and Ecuador. It also reached an agreement in May to sell its Uruguay business for $440 million to Luxembourg-based Millicom International. 

($1 = 0.8535 euros)

(Reporting by Andres Gonzalez and Amy-Jo Crowley; Additional reporting by Federico Maccioni in Dubai; Editing by Tommy Reggiori Wilkes and Rachna Uppal)