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Cablems Leads Mexicos Acquisitions Drive

Mexico City-Cablemás is living up to its reputation as one of the most aggressive consolidators of cable systems in Mexico, having recently acquired two operations and planning to buy several more in the near future.

Through one of its foreign investors, Cablemás recently added some 35,000 subscribers to its existing customer base of 400,000.

Mandeville Partners LLC, a partner in Cablemás part-owner Olmeca Cable Investments S.A., recently finalized the purchase of a 28,000-subscriber system in the city of Mérida, in the Yucatan peninsula, and also bagged a 6,600-subscriber system in Poza Rica, located in the Gulf state of Veracruz.

While not particularly huge deals, the purchases are indicators of Cablemás' appetite and the bigger picture of consolidation sweeping Mexico's cable-systems business.

Cablemás-along with other major Mexican MSOs-is rapidly expanding its existing business to build broadband networks offering voice, video and data. This has sparked a race among the major players to snap up smaller, independent cable operations.

Illustrating the fast pace of the consolidation right now, Cablemás chairman Alejandro Alvarez Figueroa said the MSO had almost doubled its subscriber base in the past six months.

"We will continue to buy systems and convert them into broadband networks," he added.

Cablemás is the brand name under which Grupo Telecab S.A. operates. The MSO is controlled by members of the Alvarez family, along with minority backing from investment funds Citicorp Venture Capital and Olmeca.

Alvarez said the MSO could add another 100,000 subscribers if a further three or four planned acquisitions are made. What's more, the company is seeking a strategic investor with an eye toward selling shares in an initial public offering.

Some of the Mexican cable consolidators are focusing solely on purchasing new operations where they have existing clusters of systems. However, Cablemás' philosophy is more to nail down attractive deals wherever they arise, regardless of geography, said Brian Sorge, senior vice president at Denver-based investment bank Daniels & Associates, which represented the operators that sold out to Mandeville.

Guadalajara-based MSO Megacable S.A. has also emerged as a consolidator in the Mexican cable market. By the end of the month, its expects to finalize the purchase of a 12,800-subscriber, 550-megahertz system in the southwestern state of Michoacan, according to company executives.