Mexico Telecommunications Report Q3 2012
Business Monitor International, May 2012, Pages: 108
The Mexico Telecommunications Report provides industry professionals and strategists, corporate analysts, telecommunication associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Mexico's telecommunications industry.
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%.
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 107
AlcatelLucent Selected Latin America Contracts Q And Q , , Telmex, Axtel , Telcel (América Móvil) , Telefónica Móviles México (Movistar) , Iusacell , Nextel ,
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