With its relatively low telecoms penetration, Mexico harbours one of the more attractive investment potential among the countries in Latin America and this is reflected in BMI’s Telecoms Risk/Reward Ratings for the region. While we are cautiously optimistic of Mexico’s short-term growth story, the skewed competitive landscape in favour of incumbents Telcel and Telmex, and the regulator’s inability to improve the situation threaten to prevent the growth prospects from materialising.
Our mobile subscriber forecast for Mexico was downgraded after the sector unexpectedly contracted in Q411. However, we continue to see strong growth in the prepaid dominant mobile market.
Our forecast for Mexican mobile ARPU rates envisages the average ARPU for the market falling to MXN138 by the end of 2016. With considerable pressures on operators to expand services and continue driving growth, Mexico looks set to experience a definite downward trend for ARPU. Meanwhile, due to a lack of new data from the regulator, we have retained our subscriber forecasts for the number of internet users, as well as fixed-line and broadband subscribers in Mexico.
BMI continues to be concerned about Mexico’s regulatory environment and the unlevel playing field. In Q112, the credibility of regulator Cofetel was dealt a number of blows. Firstly, its president, Mony de Swaan, was put under investigation following claims that he awarded two contracts worth roughly US$200,000 for businesses run by close friends. Secondly, an OECD report found that the cost to the Mexican economy of the inefficiencies in the sector was US$25bn a year or 1.8% GDP per annum.
However, in March 2012, Mexican antitrust watchdog, Comisión Federal de Competencia (Cofeco), rejected an appeal filed by local telecoms operator América Móvil against a ruling that it holds a dominant position in the market for mobile call termination. The move may result in asymmetric regulation on the operator’s wireless unit Telcel by the Cofetel. Nevertheless, more steps are required to erode the dominance of América Móvil.
Mexico remained in third position in BMI’s Latin America Telecoms Risk/Reward Ratings for Q312, although its scores fell the most, compared with all the other countries. Despite Mexico’s continued vulnerability to external shocks, we forecast economic growth will be bolstered by solid private consumption and robust investment in the coming quarters. As such, we maintain our above-consensus real GDP growth forecast of 3.4% for 2012, and are upgrading our 2013 forecast from 2.7% to 3.0%.
Mexico Telecommunications Report Q3 2012
Published: May 2012 No. of Pages: 108 Price: US $ 1175
Executive Summary . 5
SWOT Analysis 6
Mexico Mobile Market SWOT Analysis . 6
Mexico Wireline Business Environment SWOT .. 7
Mexico Political SWOT .. 7
Mexico Economic SWOT … 9
Mexico Business Environment SWOT .. 10
Risk/Reward Ratings . 11
Latin America … 11
South America Risk/Reward Ratings, Q312 . 14
Mexico .. 14
Industry Forecast Scenario .. 16
Mobile … 16
Table: Telecoms Sector – Mobile – Historical Data & Forecasts 16
ARPU 18
Table: Telecoms Sector – Mobile ARPU (MXN) – Historical Data & Forecasts . 18
Fixed Line . 20
Table: Telecoms Sector – Fixed Line – Historical Data & Forecasts .. 20
Internet.. 22
Table: Telecoms Sector – Internet – Historical Data & Forecasts .. 22
Market Data Analysis . 24
Mobile … 24
Table: Mexico Mobile Market, Q411 … 28
Table: Mexico Mobile Market Net Additions (‘000) 29
3G 32
Table: Mobile Contract Wins … 34
Mobile Operator Data . 35
Table: Mexico Market Overview .. 35
Table: Telcel 36
Table: Movistar 37
Table: Iusacell . 38
Table: Nextel 39
Mobile Content … 40
Regional Overview … 40
Country Outlook .. 42
Value-Added Services Timeline 47
Table: Value-Added Services Timeline 47
Fixed Line . 48
Table: Mexico Local Access Market, Q311 .. 50
Regional Analysis 51
Table: Telmex Income Statement, Q411 (MXNmn) .. 51
Subscriber Types .. 53
Long Distance .. 53
Table: ILD Minutes By Recipient Country Q211 (’000) .. 54
Pay-TV And Triple-Play… 54
Internet 58
Table: Mexico Internet Users By Access Type, 2002-2010 (’000) … 58
Table: Mexico Internet Subscription Market, 2006-2010 (’000) .. 59
Table: Mexico Fibre Optic Network, 2002-2009 (’000km) .. 62
Table: Mexico’s Wireline Developments .. 63
Regulatory Developments 65
Division Of Regulatory Responsibilities In Mexico .. 65
Mexico: Regulatory Bodies And Their Responsibilities … 65
Industry Developments . 70
Competitive Landscape 71
Table: Key Players In Mexico Telecoms Sector … 71
Company Monitor .. 72
Alcatel-Lucent, Selected Latin America Contracts, Q411 And Q112 … 75
Operator Profiles … 76
Telmex.. 76
Axtel . 80
Telcel (América Móvil) 83
Telefónica Móviles México (Movistar) . 87
Iusacell 90
Nextel … 93
Regional Telecommunications Penetration Overview … 95
Mobile … 95
Table: Regional Mobile Penetration Overview 95
Fixed Line . 96
Table: Regional Fixed-Line Penetration Overview .. 96
Broadband 97
Table: Regional Broadband Penetration Overview . 97
Demographic Outlook … 98
Mexico’s Population By Age Group, 1990-2020 (‘000) 99
Mexico’s Population By Age Group, 1990-2020 (% of total) . 100
Mexico’s Key Population Ratios, 1990-2020.. 101
Mexico’s Rural And Urban Population, 1990-2020 … 101
Glossary Of Terms … 102
Table: Glossary Of Terms .. 102
BMI Methodology . 103
How We Generate Our Industry Forecasts . 103
Table: Key Indicators For Telecommunications Industry Forecasts .. 103
Telecoms Risk/Reward Ratings … 105
Risk/Reward Ratings Methodology 105
Ratings System … 105
Indicators … 105
Table: Ratings Indicators … 106
Weighting … 107
Table: Weighting Of Indicators.. 107Table: Telecoms Sector – Mobile – Historical Data & Forecasts . 16
Table: Telecoms Sector – Mobile ARPU (MXN) – Historical Data & Forecasts . 18
Table: Telecoms Sector – Fixed Line – Historical Data & Forecasts . 20
Table: Telecoms Sector – Internet – Historical Data & Forecasts . 22
Table: Mexico Mobile Market, Q411 . 28
Table: Mexico Mobile Market Net Additions (‘000) . 29
Table: Mobile Contract Wins . 34
Table: Mexico Market Overview . 35
Table: Telcel . 36
Table: Movistar. 37
Table: Iusacell . 38
Table: Nextel . 39
Table: Value-Added Services Timeline . 47
Table: Mexico Local Access Market, Q311 . 50
Table: Telmex Income Statement, Q411 (MXNmn) . 51
Table: ILD Minutes By Recipient Country Q211 (‘000) . 54
Table: Mexico Internet Users By Access Type, 2002-2010 (‘000) . 58
Table: Mexico Internet Subscription Market, 2006-2010 (‘000) . 59
Table: Mexico Fibre Optic Network, 2002-2009 (‘000km) . 62
Table: Mexico’s Wireline Developments . 63
Table: Key Players In Mexico Telecoms Sector . 71
Table: Regional Mobile Penetration Overview . 95
Table: Regional Fixed-Line Penetration Overview . 96
Table: Regional Broadband Penetration Overview . 97
Table: Glossary Of Terms . 102
Table: Key Indicators For Telecommunications Industry Forecasts . 103
Table: Ratings Indicators . 106
Table: Weighting Of Indicators. 107