Development bank backing could boost Altán's social purpose

The rescue of the Altán consortium through the injection of money from the Mexican development bank Nafin-Bancomext could mean greater government influence to give a social purpose to the shared mobile network in the 700MHz band.

The government could use Altán's network to complement its work at CFE-TEIT, the telecom unit of federal power company CFE, and reach disconnected areas with the last LTE mile, Jesús Romo, an analyst at consultancy Telconomia, told BNamericas.

It was recently reported that the development bank would inject US$100mn into Altán, which operates the shared network, as part of a rescue package for the company that is in bankruptcy protection.

Last year, while it was already in bankruptcy protection, Altán received a contribution of US$50mn.

According to local press reports, Altán owes 30bn pesos (US$1.53bn) to a total of 119 companies.

Priority creditors include Axtel, Morgan Stanley, Isla Guadalupe Investments, Megacable, Hansam and China Mexico Fund (CMF). One of the largest creditors is Nokia, which is owed 3.89bn pesos.

"This is a very sui generis rescue, because precisely during the pandemic there was much talk that in Mexico there was no rescue of private companies impacted by the pandemic," Romo said.

President Andrés Manuel López Obrador focused on austerity from the beginning of his term in late 2018.

"The justification for putting money from the development bank in this company and not in others has to be something social," Romo added.

According to local newspaper El Economista, Altán's rescue would be accompanied by changes in its leadership, with the appointment of Carlos Gabriel Lerma Cotera, a former Bancomext official, as CEO.

Although the government will not directly control the company, which will continue to be a PPP, it could have more interference in it and take advantage of its infrastructure to fulfill the constitutional mandate of connecting Mexicans.

Initially, Altán's purpose was to generate more competition in the market with the entry of virtual mobile operators (MVNOs).

Since López Obrador took office, Mexico has been criticized for its lack of planning on connectivity issues. CFE-TEIT’s network only reaches a very small percentage of the population, with less than 30 localities connected, said Romo.

Recently, CFE-TEIT reached agreements with several satellite companies to involve them in the state connectivity project.

CFE-TEIT also recently announced investments of 15.6bn pesos to develop connectivity projects, including a fiber network known as Internet para Todos (Internet for All) and a public telecommunications network to provide mobile services.

According to the financial model for the shared network, this year the infrastructure should have about 10mn clients. However, Altán currently serves around 6mn end users, according to the latest data from the company.

Altán reaches 70% of the Mexican population with coverage. Its goal of reaching 92% was postponed from 2024 to 2028.

"With the problems that the electricity sector has to comply with the mandate and the needs of the shared network, the perfect storm was created for the government, which through the development bank can exercise a position that allows it to yield influence," said Romo.

However, modifying the purpose of the shared network is not easy. For issues such as its wholesale use, the constitution would have to be modified. However, other issues could be resolved with changes to the federal telecommunications and broadcasting law or the PPP contracts themselves.

"The government could now say that they are incorporating an LTE network that has more than 70% of the population covered into the connectivity policy," the analyst said.

However, Romo does not consider that the government will take direct control of Altán, but rather that the shared network may be complementary to the CFE-TEIT project.

The analyst believes that Altán's mobile network could function as the last mile of the government's connectivity program, while backhaul would be provided by satellite companies.

"Altán will continue to have its competitive vocation to attract MVNOs and generate traffic, that will continue," he added.