Mexican Telecom Sector Witnesses a Surge in Investments

Mexico has in recent times been witnessing massive investment in its telecom sector. The country’s Secretariat of Communications and Transport (SCT) declared that a total of more than $6.5 billion was invested over the last three years. In addition, around $13.5 billion has been invested recently in the telecom sector. Moreover, the upcoming nationwide shared broadband network will further attract around $7.5 billion of investment.

In 2014, the government of Mexico introduced major reforms within its telecommunications sector. Mexico’s telecom regulatory authority, the Federal Telecommunications Institute (IFT), identified America Movil SAB AMX as the dominant player in this sector. America Movil’s wireline division, Telmex, currently controls around 70% of the Mexican market, whereas its wireless division, Telcel, holds about a 68% market share. As a result, the IFT imposed several stringent measures on the company.

At present, there are three nationwide telecom operators in Mexico. America Movil and Spanish telecom giant Telefonica SA TEF were the two incumbents. Last year, the U.S. telecom behemoth AT&T Inc. T entered the fray with the acquisition of Grupo Iusacell and Nextel de Mexico. Furthermore, AT&T acquired U.S. satellite TV giant DIRECTV, which had a strong Latin American presence including Mexico. In addition, the IFT has permitted the Mexican TV broadcasting giant Grupo Televisa SA TV to enter the country’s telecom field. However, the company is yet to take any decision in this regard.

A massive project of shared wireless network was undertaken by the Mexican government in 2014 to instil competition in the highly monopolistic telecom industry. The idea was to facilitate small-scale telecom operators to use this state-owned network for their wireless coverage instead of installing their own network, which tends to be a highly capital intensive process.

The SCT opened the tender for the proposed wholesale shared mobile network project as early as Mar. 2015. However, the auction finally materialized on Jan 29, 2016. The SCT has decided to auction at least 90 MHz of spectrum within the 700 MHz-band to cover nearly 98% of the population by 2018. The SCT has confirmed that it will announce the names of the winners of its 700 MHz nationwide shared broadband network on Sep 29, 2016.

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