Mexico's competition watchdog has blocked a $1.6 billion telecoms deal that would have linked companies belonging to two of the country's richest men, both companies announced.

The Federal Competition Commission's board on Wednesday ruled three to two against broadcaster Televisa's planned acquisition of half of cell phone company Iusacell, the companies said. Both plan to contest the decision.

The decision "weakens competition in a key sector of Mexico's development," Televisa, the world's biggest Spanish-language broadcaster, said in a statement.

The commission said last week it would announce the decision after informing both companies.

The deal would have allied Emilio Azcarraga, who owns Televisa, and Ricardo Salinas, who owns Iusacell and Mexico's second broadcaster TV Azteca.

The commission's rejection is a boost for tycoon Carlos Slim, reputedly Mexico's richest man, whose operator America Movil claims around 70 percent of the Mexican cell phone market, as well as 80 percent of land lines.

Slim is seeking to enter the television market.