Mexico's competition watchdog blocked a $1.6 billion telecoms deal that would have linked the empires of two of the country's richest men, sources briefed on the ruling said on Wednesday.

The rejection of the proposal will cement telephone tycoon Carlos Slim's dominance of the Mexican cell phone market, where his companies account for 80 percent of subscribers.

Watchdog Cofeco's five-member board ruled on broadcaster Televisa's planned acquisition of half of phone company Iusacell more than a week ago on January 24, but have said it will not announce the result until both parties had been informed.

Officials from Cofeco served notice of the decision on Iusacell on Wednesday and sources briefed on the decision told Reuters the proposal had been rejected by three votes to two.

They rejected it 3-2, categorically, a source from one of the companies said.

The deal would have forged an alliance between media tycoons Emilio Azcarraga, who owns Televisa, and Ricardo Salinas, who owns Iusacell as well as Mexico's second broadcaster TV Azteca.

Televisa, the world's biggest producer of Spanish-language television content, needed Iusacell to add cell phones to its growing basket of services.

Slim's Telmex has been denied permission to enter the television.

(Additional reporting by Veronica Gomez; Editing by Bob Burgdorfer)

Mexico