Snapshot: Mexico's telecommunications market

The Mexican telecommunications market is facing a decisive year, with 5G spectrum auction plans and the start of the biennial evaluation of the impact of asymmetric measures imposed on dominant player América Móvil.

“In recent years, it has been the competing operators, other than the preponderant economic agent in telecommunications, who have dedicated an absolute and proportional amount greater than the sectoral total, despite registering a marked competitive imbalance in revenues, users, operating margins, spectrum ownership, among other relevant metrics,” says Ernesto Piedras, an analyst at The CIU in an article published this week.

According to the latest figures from regulator IFT, private investment by telecom operators in 2021 was 107.3bn pesos (US$5.63bn), similar to that in 2020. Of the total, 72.7% corresponded to infrastructure.

As of March 2022, the accumulated figure for the previous 12 months also amounted to 107.3bn pesos, a reduction of 0.4% compared with the previous period, according to IFT.

According to Piedras, América Móvil accounted for around 10% of investments in 2021.

“Competing operators have intensified the execution of resources to deploy and develop their networks, such that they account for practically nine out of 10 pesos that are invested. These went from accounting for just over half (52.7%) in 2014 to being the leaders in investment in telecommunications,” he wrote.

Telcos in 2021 reported 555bn pesos in total income and 407bn in costs and expenses, so the operating profit was 148bn pesos, says IFT in its statistical yearbook.

América Móvil’s Telcel achieved billing of 55.9bn pesos in 4Q21, followed by the group’s Telmex with 30.7bn. AT&T was in third place with 14.7bn pesos.

MOBILE SERVICES

The penetration of mobile services was 86% with 108.8mn lines in December 2021. 

América Móvil had 70.5% of the lines and AT&T 17.6%, followed by Telefónica, which has just completed a divestment in its mobile network to operate on AT&T, with 9.6% of the market.

This year, IFT plans to offer 70MHz in the 600MHz band (614-698MHz), 50MHz in the 3.3GHz band and 90MHz in the L band (1,427-1,518MHz), all conducive to 5G. Along with these frequencies, surplus portions of spectrum will be offered for 4G services.

The tender will have to overcome the problem of the high cost of the spectrum, which has been the reason for failure in previous auctions.

This week, it emerged that AT&T would also return part of its spectrum.

Some 80.5% of mobile internet lines correspond to prepaid services.

FIXED SERVICE

At the end of 2021, 24.57mn fixed internet services were recorded, of which 38% were cable, 35% fiber optics and 21% ADSL copper networks. Another 4% were mobile wireless networks and 2% satellite connections.

América Móvil held 40% of the market, followed by Televisa with 25.9% and Megacable with 14.7%. Recently, Televisa proposed to merge its operations with Megacable.

Grupo Salinas was fourth with 14.6%.

Internet penetration in Mexico stood at 70% of households, with 81% of connections corresponding to services between 10Mbps and 100Mbps.

PAY TV

In the case of Pay TV, Mexico had 25.18mn subscribers at the end of 2021, 49% being cable services.

Satellite reaches 41%, followed by IPTV with 9%.

Grupo Televisa (Sky, Izzi, Cablevisión, among others) led the market with 62.4%. In second place was Megacable with 21%.

Pay TV penetration stood at 72%.

Meanwhile, Mexico recorded 24.9mn fixed telephone lines, with a penetration of 70% of households.