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(Last updated: 5 May 2009)
Trends and opportunities
The market
Mexico holds its place among the top three telecoms markets in Latin America. Coupled with a focus on curbing inflation by the Central Bank the prospects for growth in Mexico remain stable with foreign direct investment expected to increase in line with the government’s focus on revamping the country’s infrastructure.
With a population of over 110 million, Mexico is a market with considerable potential. While most cities have good mobile and fixed services coverage many rural towns and cities still have limited coverage. Expanding to more remote regions will be a focus for both mobile and fixed based services operators.
The highly anticipated WiMAX auctions should aid the spread of broadband services as well as drive up subscriptions in major towns and cities. There are a large number of potential subscribers live in urban areas in Mexico, a factor that is beneficial to operator’s wishing to launch services. However, on the downside, the size of the country makes national coverage somewhat difficult. Although GDP per capita is reasonable there is still a large number of Mexicans living in poverty and telecom services remain out of the reach of many.
Mobile phone services
A steady growth of the overriding trend in the Mexican mobile market, continuing in 2008 reporting a 3.4 per cent quarterly growth. Although is expected that growth to pick up, particularly in the final quarter of the year it seems that the overall growth for the Mexican market will be lower than seen in 2007. The reason for this decline has much to do with the higher penetration rate as the difficulties in rolling out mobile services to remote areas. Additionally, the market remains dominated by Telcel, which has a 72 per cent share of the market. However a particularly strong showing from Movistar has reduced the operator’s lead, though alternative operators in the market are considerably limited in scope.
By 2013, it is predicted that the penetration rate will have reached 94 per cent with 108 million subscribers.
Internet
Broadband is the fastest area of growth in the Mexican telecoms market with all operators reporting strong increases throughout 2008. The good growth reported by market leaders such as Telmex, and smaller operators like Axtel and Maxcom has driven the market to good numbers. The forecast for Internet usage has increased and now it is expected there to be more than 31.6 million Internet users in Mexico by 2013, with penetration reaching 28 per cent. The increase will be aided by government projects aimed at improving access in different towns and cities.
Broadband could easily be stimulated by the auction of WiMAX spectrum introducing a number of new players into the broadband market. Pay-TV operators and smaller existing broadband operators are reported to be interested in acquiring licenses. In the meantime, most operators have reported strong broadband growth, with Telmex seeing good increases in its services in particular.
Opportunities
The Mexican telecommunications market represents many opportunities for investments in a medium-risk environment:
- New legislation to allow triple play services and open up mobile market to resellers should stimulate competition and lower prices.
- As Telefonica Moviles rolls out EDGE services and Iusacell 3G/EV-DO services, it is likely that other operators will follow suit with the result that there could be opportunity for infrastructure providers to bid for expansion contracts.
- The VoIP market is booming and other equipment vendors are likely to follow the lead of Nortel Networks and Siemens in focusing on VoIP in Mexico, and using Mexico as a base for regional expansion of VoIP.
- With penetration at only 58 per cent there are still plenty of opportunities to grow in the mobile market.
Specific opportunities for Australia are as follows:
- Wireless telecommunications in Mexico offers opportunities in:
- Wireless access controllers
- Internet gateways
- Wireless packet switches
- Microwave transmitters
- Multiplexors
- Personal communications services
- Remote data access, exchange and processing
- Radio communications services
- Data acquisition
- Data service for banking, industries, retailers, government and education institutions in:
- Frame relay
- ATM
- IP
- VPN
- X.25
- Leased lines
- Satellite system, such as private network solutions and private links on commercially available satellite
- Teleconferencing – voice, data and video service
- Other related products such as:
- Cable and radio systems
- Manufacture telecommunications equipment
- Switching
- Microwave
- Power equipment
- Batteries
- Transmission equipment
- Networking monitoring
- Control system
Competitive environment
Telmex
Telmex is Mexico’s incumbent telco, offering local, long-distance and Internet telephony, data and video services, Internet access and integrated solutions for corporate customers.
Telmex operates a 74,000km digital fibre-optic and had 18.202mn fixed lines, 2.484mn 64kbit/s line equivalents for data transmission and 2.923mn Internet access accounts, including 2.381mn ADSL accesses, at H107. The operator also has significant international activities, primarily in Latin America.
Telmex has several subsidiary companies in Mexico. Red Uno provides telecommunications voice, data and video solutions for the corporate market in Mexico.
Telnor provides Telmex’s telecommunications services in the state of Baja California and in the north-western of Sonora. Finally, Uninet supports Telmex’s data network.
The company has operations in Chile, Brazil, Argentina, Colombia and Peru.
Axtel
Axtel is Mexico’s second largest telephony provider and consolidated its position in December 2006 with the acquisition of rival Avantel. The combined operation provides local and long-distance telephony, Internet, data and corporate telecoms services over its own infrastructure in 23 cities, as well as long-distance services to customers in over 200 cities.
Telcel (America Movil)
America Movil is the largest mobile operator in Latin America with 153.42 million mobile and 3.8 million fixed subscribers in 16 countries. The company operates in Mexico through its wholly owned subsidiary Telcel, which was established in 1990 and is Mexico’s dominant operator with 46 million subscribers, a market share of 73.6 per cent.
Telefonica Moviles Mexico (Movistar)
Established in 1998, Telfonica Moviles Mexico is the second-largest operator in the country, behind Telcel.
Iusacell
Iusacell launched cellular services in Mexico City in 1989 and was established in its current form in 1992. The company was the first alternative operator to provide competitive long-distance services to Telmex. In August 1996 Iusacell owns and operates and PCS services in seven of Mexico’s nine regions, including Mexico City, Guadalajara, Monterrey, Tijuana, Acapulco, Puebla, Leon and Merida. In total Iusacell’s licences cover approximately 90 per cent of the country’s total population. Following its merger with Unefon, the new Iusacell has national CDMA coverge and 3.9 subscribers and a marker share of 6.3 per cent.
Key players: Mexico telecoms sector
|
Company name |
Ownership |
Market |
Telefonos de Mexico |
Carso Grupo Telecomm (49.1 per cent, SBC, International (8.6 per cent), free flat (42.3 per cent) |
Fixed, line telephony (local, domestic long-distance, international, data, internet) |
| Axtel |
Citigroup(10 per cent) |
Fixed, line telephony (local, domestic long-distance, international, data, internet)Acquired Avantel December 2006 |
| Alestra Onexa |
Onexa (51 per cent, itself 100 per cent owned by LAFA), AT&t |
Fixed, line telephony (local, domestic long-distance, international, data, internet) |
| Maxcom |
Bank of Maerica, Equity Partners (80 per cent), Vazquez Arroyo Carstens family (16.34 per cent), individuals and employees 3.66 per cent) |
Fixed, line telephony (local, domestic long-distance, international, data,Cable TV, MVNO, licence |
| Telcel America Movil |
America Movil (100 per cent) |
Mobile |
Telefonica Moviles Mexico
(Movistar) |
Telefonica Moviles (100 per cent) |
Mobile |
| Iusacell |
Grupo Salinas (77 per cent), free float (23 per cen |
Mibile, Unefon merged in 2007 |
| Nextel Mexico |
NII Holdings (100 per cent) |
Enhanced specialised mobile radio (ESRM) |
| Uninet |
Telmex (100 per cent) |
ISP |
| Cablevision |
Grupo Televisa (100 per cent) |
Cable, TV, internet |
| TV Azteca |
Azteca Holding (56 per cent), free float (44 per cent) |
Broadcasting programming |
| Televisa |
Grupo Televisa (100 per cent) |
Broadcasting programming |
| Sky Mexico |
Grupo Televisa (60 per cent), News Corp (30 per cent), Liberty Media (10 per cent) |
DTH |
| Cablemas |
Alvarez Family (51 per cent) Televisa (49 per cent) |
Cable, TV, internet, telephony | |