Mobile

There are four mobile networks in Mexico: Telcel (Radiomovil Dipsa SA de CV), owned by América Móvil, dominates the market with 71% of the market share (at the end of Q1 2010). The other operators are Movistar (Telefónica) with 21% market share, Iusacell (Salinas group) with 4.4%, and Nextel (NII holders and Televisa) with 3.7%.

The market could be shaken up in the near future as recent 3G¹ spectrum auctions set up opportunities for existing and new players to increase competition and reshuffle market shares. Additionally, Mexican media group Televisa, one of the largest in the Spanish-speaking world, acquired a 30% share of Nextel at the beginning of 2010, allowing the company to enter the mobile market without having to build its own infrastructure. Indeed, the consortium Televisa-Nextel won one of the three blocks of 30 gigahertz that was allocated².

Despite the economic crisis, Mexico’s mobile sector has demonstrated strong growth – evidenced by double digit growth in 2009 (10.9%) during a period of decline in Mexican GDP. At the end of 2009, the country’s mobile penetration stood at 76.2%. Despite a slowdown in growth in the first quarter of 2010, mobile penetration is expected to exceed 80% by the end of 2010. The decrease in growth rates can be explained partly by the already high penetration rates.

Following an increase in VAT from 15% to 16%, and a new tax of 3% on products and services, mobile services have experienced an average price increase of 3.2% over the course of 2009. The expected increased competition and entrance of new players through new spectrum allocations are expected to introduce a new dynamic to the market, and possibly a drop in prices.

Broadband Internet market

Although the Mexican broadband market has been showing high growth rates since services were launched in 2000, there is still significant room for growth. Fixed broadband subscriptions amounted to 9.7 million by the end of 2009 (8.8 subscriptions per 100 inhabitants), dominated mainly by ADSL (7.3 million, or 75% of the total market). In addition, there are over 80 ISPs in Mexico³, many operating only in certain cities or specific regions. Infinitum, the broadband Internet service of Telmex, accounts for the highest share of ADSL subscriptions in the country. The entrance of cable TV providers, which have been upgrading their networks to provide high speed Internet, has lead to additional competition in the market; by the end of 2009, cable broadband subscriptions made up 22% of all fixed broadband subscriptions.

In many cities, especially those with relatively low income, the level of competition remains very low, with only one or a very limited number of service providers. To increase the availability of broadband to these regions, Mexico's Communications and Transportation Ministry recently (June 2010) awarded a license to allow the use of unused fiber-optic capacity from a state-run utility, the Federal Commission for Electricity.⁴

New wireless broadband services will also create intermodal competition and push further development of the Internet broadband market, especially after the allocation of new spectrum to mobile operators. For example, the Televisa-Nextel consortium will provide Televisa with a new platform to provide Internet broadband services.

Local loop unbundling has not been implemented and is under review by the regulatory authority. 

Fixed line market

The demand for fixed telephone lines has been stagnating for the past five years and started to decrease in 2009. By the end of 2009, Mexico had about 19.3 millions of fixed telephone lines and the penetration rate stood at 17.5%, compared to 19.1% in 2008. The percentage of households with a fixed telephone line has also decreased from 53% in 2007 to 46% in 2009. At the same time, a growing number of households have a mobile phone. The percentage of households with access to mobile phone has grown from 55% in 2007 to 69% in 2009.

The fixed line market is dominated by incumbent Telmex, which has about 80% of the market. The market has seen increasing calls for increased competition, and one of the main challenges of the regulatory authority, Cofetel, is to identify appropriate regulatory policies.

At the same time, technological convergence is increasingly redefining Mexico’s telecommunication market. The three main cable TV providers (Megacable, Cablemás and Cablevisión (Televisa)) have been building their ‘triple play services’. And through its recent entry into the mobile cellular market, Televisa will be able to start offering quadruple play services (mobile cellular, TV, Internet and fixed-line voice over IP).