U.S. Markets open in 4 hrs 18 mins

Telefonica in talks to buy Mexico's Iusacell -reports

MEXICO CITY, Feb 5 (Reuters) - Spanish phone company Telefonica is in talks to buy Mexico's third-largest cellphone company, Iusacell, according to media reports on Wednesday.

Citing people familiar with the matter, Bloomberg and Spanish newspaper El Economista reported that Telefonica was in talks with Grupo Televisa and Grupo Salinas, which co-own Iusacell.

The Spanish company is being advised by Banco Bilbao Vizcaya Argentaria and Lazard, one of the sources told Bloomberg.

Telefonica, Televisa and Grupo Salinas all declined to comment on the reports.

An official at one of the companies said on condition of anonymity that it would be odd for Telefonica to consider a deal in the near-term given that many details of Mexico's new telecom regulation have yet to be ironed out.

At an event on Tuesday, Telefonica's president in Mexico Francisco Gil Diaz said the company "always has deals on the radar."

Last month, Telefonica signed a roaming agreement with Nextel in Brazil and Mexico. The company has also said it plans to work with mobile virtual network operators in Mexico.

Telefonica has about 20 percent of Mexico's cellphone market, behind Carlos Slim's America Movil, which has about 70 percent.

Mexico's new telecom regulator the Federal Telecommunications Institute (IFT) is also responsible for antitrust issues in the sector. Tasked with increasing competition in Mexico's phone market, it is awaiting legislation that will detail powers it will have to tackle Slim's dominance in the sector and how it should act on matters of competition.

Constitutional reform changed Mexico's telecom rules last year. Lawmakers are expected to announce details of the new rules this month.