This report provides a comprehensive overview of trends and developments in Mexico’s telecommunications market. The report analyses the mobile, internet, broadband, digital TV and converging media sectors. Subjects include:

• Market and industry analyses, trends and developments;
• Facts, figures and statistics;
• Industry and regulatory issues;
• Infrastructure;
• Major Players, Revenues, Subscribers, ARPU, MoU;
• Internet, VoIP, IPTV;
• Mobile Voice and Data Markets;
• Broadband (FttH, DSL, cable TV, wireless);
• Convergence and Digital Media;
• Broadband market forecasts for selective years to 2020.

Key developments:

Fixed-line teledensity continues to fall; local loop unbundling awaiting approval; local telephony costs remain the highest in OECD countries; Google TV launches with Sony; 25% growth in pay TV subscriptions and increased interest in triple-play services; cable industry calls for third TV network to compete with Televisa; mobile penetration approaches 85%; spectrum auctions in the 1.9GHz and 1.7GHz bands completed; Telcel maintains a 70% market share; Nextel enters the mobile market; Telefónica success in spectrum auctions; regulator withdraws fine against Telcel relating to MTRs; Televisa buys a 50% stake in Iusacell but merger rejected by Federal Competition Commission over FTA TV competition issues; América Móvil develops m-payment platform with banks; regulator considers auctioning blocks of 15MHz in the 700 MHz band; cable operators report lower churn due to triple-play services; Smart Grid deployments to gather pace into 2012; LTE looms over further substantial WiMAX investment; government’s CompuApoyo initiative targets 1.7 million homes for computers and broadband access; regulator’s market data to March 2012; telcos’ financial and operating data to Q1 2012; market developments to mid-2012.

Companies covered in this report include:

Telcel, Movistar, Iusacell, Nextel Mexico, Televisa, Globalstar, Unefón, Telefónica, Telmex, Megacable, Cablemás, Cablevisión, Maxcom, Sistemas Interactivos de Telecomunicaciones (SIT), Axtel, Megafón, InterCable, CFE, Alestra, Maxcom, Marcatel.

Executive Summary

Mexico’s regulator consolidates authority in bid to develop competition

BuddeComm’s annual publication, Mexico – Telecoms, IP Networks, Digital Media and Forecasts, provides a comprehensive overview of the trends and developments in the telecommunications and digital media markets in one of Latin America’ largest countries. The report includes the regulator’s market data to the first quarter of 2012, telcos’ financial and operating data to March 2012, and market developments into mid-2012.

Economic background

Mexico’s economy was severely affected by the financial difficulties of 2008/9, though it has proved more resilient than others in its recovery. Economic priorities for the new government elected in mid-2012 are centered on reducing poverty and creating jobs, as well as upgrading infrastructure, modernising labour laws, and fostering private investment in the energy sector. The OECD predicted that in 2013 Mexico’s economy would grow 3.8%, following growth of 3.6% in 2012, 4% in 2011 and 5.5% in 2010. The Bank of Mexico forecasted GDP growth at between 3.2% and 4.2% for 2012.

Telecom market overview

Growth in the telecoms market has long outpaced broader economic growth, driven primarily by the mobile and broadband sectors. Growth has increased steadily since 2010 despite ongoing economic difficulties, and investment opportunities are strong during the next few years. There remain regulatory limitations which have restricted effective competition in both the broadband and fixed-line sectors. However, efforts in 2012 have addressed some of the limitations, consolidated some powers with the regulator.

Mobile market

Mexico boasts the second largest mobile market in Latin America after Brazil. The number of subscribers overtook fixed-line users as early as 2000, and though growth has slowed in recent years in response to higher penetration the focus has shifted to consumer use of mobile data. To this end the major players are looking to capitalise on emerging LTE technology and the exploitation of a range of spectrum. Addition spectrum to be auctioned in the 700MHz band will help develop mobile broadband connectivity in rural areas of the country. The market remains dominated by Telcel, which has been censored by the regulator for overcharging competitors on interconnection rates.

Market Highlights

• The regulator in mid-2012 confirmed that the DTTV must be completed by the end of 2015. It also called for Congress to approve subsidy mechanisms to facilitate the switch from analogue broadcasts.
• In mid-2012 the cable industry called for the creation of a third TV network to provide competition to the dominant broadcaster Televisa. The National Cable Telecommunications Chamber called for the government to auction spectrum to create a new broadcast network, following the failure to agree on a spectrum auction plan earlier in the year.
• In mid-2012 the regulator announced that it was considering tendering blocks of 15MHz for three operators in the 700 MHz band.
• América Móvil signed an agreement in early 2012 with banks to develop an -payment platform, with a view to launching commercially in early 2013.
• The Energy Regulatory Commission has been awarded a US$405,000 grant from the US government’s Trade and Development Agency (USTDA) to support a regulatory framework for smart grid implementation. Mexico plans to invest billions of dollars over the next decade to improve electricity stability and reliability, and incorporate renewable energy resources.
• The government’s recently introduced reforms to deregulate fibre networks will encourage overall investment in developing and building the national telecoms infrastructure in coming years.

This report is essential reading for those needing high level strategic information and objective analysis on the telecom sector in Mexico. It provides further information on:

• Market liberalisation and regulatory issues;
• The impact of the global economic crisis;
• Telecoms operators – privatisation, acquisitions, new licences;
• Mobile data market developments in coming years in light of spectrum auctions and new license awards;
• 3G developments, regulatory issues and technologies including HSPA and LTE;
• Broadband migration to an FttH architecture;
• Historical and current subscriber statistics and forecasts;
• ARPU statistics and forecasts.