Citigroup Inc.'s (C) Mexican unit Banamex said Friday that Mexico's government could raise up to $1.5 billion from the auction of wireless spectrum for mobile telephony services later this year.

"It's probable that the auction of 3G spectrum takes place in the fourth quarter and could reach close to $1 billion-$1.5 billion," Banamex said in a report.

The bank based its estimate on auctions that recently took place in the European Union and Brazil, with a possible lack of bidders in Mexico keeping prices at the lower end of that range.

Federal telecommunications regulator Cofetel has submitted preliminary bidding rules for spectrum in the 1.7 gigahertz and 1.9 GHz bands to the Federal Competition Commission for review.

Cofetel said sufficient spectrum will be offered in the 1.7 GHz band to attract a new, nationwide operator. Mexico's mobile telephony industry is home to four operators.

Spain's Telefonica SA (TEF) has said it plans to bid for spectrum in order to launch advanced third-generation, or 3G, services nationwide. NII Holdings (NIHD), which operates the country's smallest wireless carrier, has also indicated it might participate in the auction.

Telcel, a unit of Latin America's largest mobile-phone company, America Movil SAB (AMX), is the largest operator with a 72.5% market share and 57.53 million subscribers at the end of March.

Banamex said that of the four incumbents, Telcel, Telefonica Moviles Mexico and NII Holdings are likely bidders, while the No. 3 player, Grupo Iusacell SA (CEL.MX), is unlikely to participate given its ample spectrum holdings and debt-restructuring talks with creditors.

The likelihood that a foreign operator would bid is very low, according to Banamex, which cited past failed attempts by Verizon Communications Inc. (VZ), Vodafone Group PLC (VOD) and France Telecom SA (FTE) to enter the Mexican market.

Banamex fingered Mexican media conglomerate Grupo Televisa SAB (TV) as a probable bidder given its existing presence in the telecommunications industry through its vast cable-TV holdings.

"We believe the probability that Televisa enters the mobile telephony market is greater than 50%. We think the company is interested in adding mobile broadband to its existing service of broadband via cable," Banamex said.

Televisa executives weren't immediately available for comment when contacted by Dow Jones Newswires.

By Ken Parks, Dow Jones Newswires, 52-55-5001-5723, ken.parks@dowjones.com