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Satellite television provider Dish Mexico has launched its service in Mexico City and the surrounding urban area, upping the ante against incumbent operator Grupo Televisa SAB (TV).

The launch brings to 10 the number of cities where Dish Mexico offers service since it started operations last November, the company said in a press release Sunday.

"Of the potential pay-TV market in Mexico of around 18 million homes, Dish Mexico has a clear opportunity in at least 12 million, of which it hopes to cover 50% in a short period," the company said.

Dish also said it eventually expects to create between 5,000 and 6,000 new jobs.

Dish, a joint venture between local telecommunications firm MVS Comunicaciones and EchoStar Corporation (SATS), offers a basic pay-TV package for as little as 149 pesos ($11.20) a month.

It competes with Televisa's satellite TV unit Sky through a billing and distribution agreement it has with Telefonos de Mexico SAB (TMX), Mexico's biggest fixed-line phone company.

Telmex's deal with Dish is considered by analysts to be a way for the fixed-line carrier to skirt local rules prohibiting it from offering pay-TV services directly.

Telmex faces increasing competition from cable TV companies offering bundled packages of phone, broadband and pay-TV services to consumers.

Televisa, Mexico's No. 1 broadcaster and the largest producer of Spanish-language content in the world, also has substantial cable TV assets through its stakes in Mexico City-based Empresas Cablevision SAB (CABLE.MX), Monterrey-based TVI and Cablemas SA.

Televisa's local CPO shares were recently down 2.2% at MXN42.40 in early trading Monday.

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