Mexico Kicks off Process for Wholesale Shared Network

Mexico’s Ministry of Communications and Transport has published a formal request for expressions of interest from companies and consortiums interested in designing, financing, deploying, operating and marketing a wholesale mobile telecommunications network. The project, a key part of President Enrique Peña Nieto’s campaign to boost competition in Mexico’s wireless market, is expected to require an investment of roughly US $10 billion. Under President Peña’s plan, the new network would be run as an independent “carrier of carriers” and would be available to any interested mobile service provider at regulated rates. The hope is that increased competition from this shared wholesale public network will translate to increased access to mobile and broadband service and lower prices for consumers.

The entire Mexican telecommunications landscape is in the process of overhaul. The country’s dominant mobile network operator, América Móvil, is now actively seeking to offload assets to get its 70 percent market share in the industry down below 50 percent, as now dictated by regulatory law. U.S. operator AT&T is continuing its expansion into Mexico; last month it reached an agreement to buy Nextel Mexico after having acquired Iusacell less than six months ago. If the deal with Nextel is approved, AT&T will surpass Mexico’s number-two operator, Movistar, and, as reported last month, might potentially pose a challenge to América Móvil. 

Add to all this the formal request for expressions of interest in building a huge telecommunications infrastructure, and President Peña is well on the way to boosting the competitive landscape of Mexican telecom. We think the sharing of infrastructure among possibly hundreds of mobile service providers is a smart way to go. More and more, competitors are becoming partners in order to lower the considerable investment required to build mobile infrastructure. With a decreased barrier to entry, the Mexican market should become more attractive to a new cast of players. The “carrier of carriers” concept is an efficient one; duplication of infrastructure is eliminated, risk is spread and prices can be more competitive. Therefore, everyone stands to gain.

The above item appeared in a recent issue of The Tarifica Alert, a weekly resource that analyzes noteworthy developments in the telecoms industry from around the world. To access all of the latest articles and issues or to speak with the research team: http://www.tarifica.com/contactus.aspx