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Mexico Announces New Telecom Investment Agency

15 March, 2016

Mexico is in the process of establishing a new Telecommunications Investment Promotion Agency thanks to a presidential decree,reported Zacks Equity Research. The government agency will be headed by the Minister of Communications and Transport,and will be responsible for installing the new shared telecom network and service provisions. 

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In 2014 the Mexican government undertook a massive project to instill competition in the country’s highly monopolistic telecom industry. The goal is to create a state-owned network of wireless coverage for small-scale telecom operators to use,instead of forcing each new operator to install their own network; which is a highly capital-intensive process.

“In March 2015,the Secretary of Communications and Transport (SCT) had opened tender to take part in this project,” wrote Zacks. “Various leading telecom infrastructure equipment developers with global operational experience had offered bids for the upcoming state-owned mobile network project in Mexico.”

In late January of this year,the SCT initiated an auction for the new state-owned 700 MHz nationwide shared broadband network. These wireless spectrums were available because all of Mexico’s TV signals went digital at the end of 2015. The SCT reportedly plans for the 700 MHz band to cover at least 98 percent of the population by the end of 2018. 

Ericsson AB,Nokia Corp.,Cisco Systems,Motorola Solutions,MSI,China Telecom Corp.,Alestra and Huawei Technologies were all among the bidders last March. By July of 2015,SCT had announced receipt of 37 tenders in total.

Meanwhile,Mexican telecom market giant America Móvil has announced a new $6 billion investment to bolster its operations throughout the country in response to recent growth by AT&T. In addition to the U.S. telecom company,America Móvil also competes heavily with Telefonica,but still retains control of nearly 68 percent of the total market share.

“America Móvil appears to be focusing on building up its wireless infrastructure to counter AT&T,which has been gradually expanding its 4G LTE wireless networks,” wrote Near Shore Americas. “AT&T has already launched 4GLTE in 12 Mexican cities,and reports say the U.S. firm will have covered most of the cities by the end of this year.”

Although the total number of mobile subscribers in Mexico rose by at least 3.1 percent in 2015,experts agree that Mexico’s telecom market is far from being saturated,which means there still is room for serious growth that investors can tap into.

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