Telcel targets MVS spectrum in 2.5GHz band

- Tuesday, November 29, 2016

Telcel targets MVS spectrum in 2.5GHz band
Source:AFP

América Móvil subsidiary Telcel entered into an agreement with Grupo MVS to indirectly acquire 60MHz of spectrum in the 2.5GHz band.

The agreement is subjected to a series of corporate and regulatory conditions, including the approval of regulator IFT.

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MVS could turn a profit thanks to legislation that allows for a secondary spectrum market, after facing the prospect of losing its concession in the 2.5GHz band following a decision from communications ministry SCT back in 2013.

The amount of spectrum in Mexico, which currently stands at 314MHz for mobile services, would reach 374MHz, surpassing the Latin American average of 319MHz.

Nonetheless, the transaction could have implications for competition in the mobile market. Ernesto Piedras, director of think tank Competitive Intelligence Unit (CIU), told BNamericas that if the IFT were to authorize this transaction, the share of spectrum in the country would be greatly unbalanced.

"Operators' share of spectrum was properly balanced after the 21st tender in 2010. This equilibrium ended when the previous regulator Cofetel failed to apply a spectrum cap and América Móvil, the preponderant economic agent, ended up with 41% of the country's assigned spectrum after the AWS tender," Piedras said.

If Telcel does acquire MVS' 60MHz in the 2.5GHz band, it would end up with 51% of the assigned spectrum in the country, said Radamés Caramago, a consultant at the CIU. "Furthermore, it would be the only operator with spectrum in this band, which is quite efficient for advanced mobile services."

According to data from Mediatelecom, the transaction would leave operator AT&T with 38.2% of the assigned spectrum and Movistar would fall from 19.5% to 16.3%.

A tender for spectrum in the 2.5GHz band could take up to one year to launch, which Caramago said would put competing operators at a disadvantage.

In Piedras' view, the government should take back the spectrum from MVS and launch a tender. In addition, he believes the regulator should start considering implementing a spectrum cap in order to keep the market balanced.