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Mexico Invests $7 Billion on Nationwide Mobile Network

05 July, 2015

The massive undertaking to install a nationwide wholesale wireless network in Mexico over the next 10 years will take an estimated $7 billion USD investment,according to the Ministry of Communications,which opened up a tender to take part in the project in March of this year. The project will increase competition in Mexico’s formerly monopolistic telecom industry and will allow small-scale telecom operators to use the state-owned network for their wireless coverage,instead of having to install their own network,which requires a large amount of up front investment capital.

The Mexican government will reportedly allocate at least 90 MHz of spectrum of the 700 MHz band for the creation of a wholesale mobile network and estimates that 12,000 mobile towers will be required to install the network.  Last year the Mexican government enacted a series of historic reforms that affected its telecommunications sector in an effort to reduce the monopoly enjoyed by America Movil,which currently controls nearly 80 percent of Mexico’s landline market and around 70 percent of its wireless market. Under the new system,America Movil’s market share will be restricted to within 50 percent,in a bold move the telecom giant is complying with.

Currently,Telefonica SA is the second largest wireless service provider in Mexico,holding an estimated market share of up to 25 percent. Also of note,AT&T,a U.S. telecom giant,has entered the Mexican market with the acquisition of Grupo Iusacell and the wireless assets of NII Holding,and the government is currently deciding how to permit both Telefonica and AT&T to take part in its new nationwide mobile network project. 

“Mexico is the largest economy in the Latin American region,with a growing middle class population eager to spend more on high-speed wireless networks for facilitating the use of smartphones and tablets,” writes Zacks.com “Also,the wireless penetration rate is relatively lower,so an investment in the nation may bode well for telecom operators and network equipment manufacturers.” 

Speaking of telecom equipment manufacturers,a number of big name infrastructure equipment developers that bring with them a large amount of global operational experience are reportedly already offering bids for the new state-owned mobile network project in Mexico,including Ericsson AB,Nokia Corp.,Cisco Systems and Huawei Technologies Co. In addition,China Telecom Corp. Ltd. is looking for a Mexican partner to form an alliance to take part in Mexico’s new nationwide mobile network project.

Mexico’s new $7 billion mobile network will also work to support the country’s already booming e-commerce market,which Forbes recently revealed has “enormous potential,” since personal devices like smartphones and tablets offer Internet access to an enormous segment of Mexico’s population. In fact,smartphone penetration here is the highest in Latin America and its growing list of services will only be improved as the new mobile network becomes available nationwide.

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