• Wal-Mart de Mexico bidding through its MVNO
• Telefonica’s Mexican business marketed off USD 110m EBITDA

Beyond ONE and Walmart’s [NYSE:WMT] Wal-Mart de Mexico [BMV:WALMEX] subsidiary are bidding for Telefonica’s [BME:TEF] Mexican unit, two sources familiar said.

In 2023, Dubai-based Beyond ONE acquired Virgin Mobile Latin America, which runs Mexican mobile virtual network operator (MVNO) Virgin Mobile Mexico, for an undisclosed amount.

Wal-Mart de Mexico is bidding through its own MVNO Bait, the two sources familiar said. With 18.3 million users, Wal-Mart de Mexico claims Bait is the largest MVNO in Mexico.

The sale of Telefonica Mexico is being led by JPMorgan, the two sources said. JPMorgan also advised on the sale of Telefonica’s Argentinian unit to Telecom Argentina for USD 1.2bn in February.

The Mexican business is being marketed off an EBITDA of about USD 110m, one of the sources said.

Telefonica Mexico reported an adjusted EBITDA of EUR 116m (USD 125.1m) in FY24, 10% lower than in FY23.

The unit, which has been deteriorating quickly, is likely to fetch an EBITDA multiple of between 3.6x and 4.5x for a price tag of USD 400m-USD 500m, the two sources said.

Those multiples are lower than those commanded by typical telecom firms, but Telefonica Mexico does no longer own a network or spectrum licenses, but rather leases capacity from AT&T [NYSE:T], said Michael Hodel, director of telecommunications and media research at Morningstar.

Indeed, the market sees Telefonica Mexico as an MVNO, one of the sources said.

The sale of Telefonica Mexico – which has been rumored since at least 2018 – is part of the Spanish telecom giant’s continued efforts to carve out Telefonica Hispam to reduce its debt, as reported by this news service. Telefonica Hispam houses the company’s Latin American units excluding Brazil.

Telefonica has reportedly mandated Rothschild to manage the sale of its Peruvian subsidiary, Telefonica del Peru, which initiated an ordinary bankruptcy procedure on 14 February. And in 2024, its Colombian subsidiary announced it agreed to merge with Millicom’s [NASDAQ:TIGO] Tigo Colombia.

Telefonica Hispam generated EBITDA-AL (a variation of EBITDA that tracks adjusted losses) of EUR 805m (USD 868m) in the nine months to the end of September 2024 on revenues of EUR 6.4bn. The division accounted for 21% of Telefonica’s overall revenues in the nine-month period, but just 10.6% of EBITDA-AL, as reported.

Telefonica, JPMorgan and Beyond ONE declined to comment. Wal-Mart de Mexico did not respond to requests for comment.