With a population of around 121 million, fixed line density in the central American country is stuck around the 18% mark and dominated by incumbent Telmex, which holds around a 62% share according to market research figures.
Telmex is part of of América Móvil, which, along with Telcel, dominates the mobile market, and it is this sector that is seeing a massive shift, following the entry of AT&T Mexico after its acquisition of Nextel and Iusacell, and the development of Red Compartida.
Red Compartida was the winning bid from Altán Redes to develop a shared network that will cover 92.2% of the population of Mexico using 4G LTE technology using the 700MHz spectrum band. The open-access wholesale network will be the largest of its kind, according to the Altán consortium.
Eugenio Galdón, who has headed the Altán Consortium as chairman of strategic partner Multitel, said when it was announced: “Everyone in the consortium is rightfully proud at being entrusted with this project, and are fully committed to fulfil Red Compartida’s mission to close the digital gap and to provide efficient network access to all Mexicans.”
Mexico decided to create Red Compartida in order to offer competition to the dominant América Móvil, controlled by businessman Carlos Slim. It beat competition from Rivada Networks, which was excluded from the bidding days before the decision was reached.
Growing data share of market
Figures from Altán Redes show Mexico’s mobile revenues sat at around $15 billion in 2016, with 61% generated by voice and 39% from data. This grew slightly to $16 billion in 2017, with data share growing. This is predicted to grow further, with data share of recurring revenues predicted to be at 48% in 2018. Overall, the market is estimated to grow at 5%.
Despite this, ARPU is expected to continue a steady decline, following international trends, where blended USD ARPU has declined by 47% from $28.50 to around $13.60 (estimated for 2020). Total ARPU in Mexico has gone from just over $10 per user to $7.80, according to the figures from Ericsson.
Put simply, Mexico’s mobile data penetration has significant room for growth, especially when compared to some other countries in the region. Data penetration sits at 61 per 100 inhabitants, compared with 73 in Colombia, 88 in Brazil, 93 in Argentina and 120 in Chile, according to IFT, the regulator.
The launch of Red Compartida is aimed at increasing competition in the market, where América Móvil is the primary wholesale provider, and at unlocking the potential of new MVNOs. In 2015 there were just two MVNOs in Mexico, compared with a global average of 14, according to Ovum.
With this growth in data comes new opportunities. Beyond AT&T’s investment in Mexico, we’ve seen the likes of Equinix recently discuss opportunities in Latin America after it completed its $800 million deal to buy Infomart Dallas, with Mexico the gateway for that data.
Mexico City – the location of Capacity Media’s Mexico Connect 2018 event in June – was earlier this year announced as one of the locations for a new Telefónica’s virtualisation hub, which will support network functions for its wholesale arm. It launched seven initially, and Mexico City was one of the first to go live.
Virtualisation is already an essential part of Telefónica’s networks, supporting the construction of a more flexible, agile and scalable network through the evolution towards the softwarisation of the different elements and layers of the network, Telefónica said.
“Moving from vertical architectures built over many networks and technologies with an unnecessary geographical spread, to simple and scalable architecture with shared infrastructure, Telefónica International Wholesale Services can deliver the best quality to its customers.
“This investment means Telefónica offers a fully virtualised network system, which enables its customers to access a virtualised platform, available worldwide, in order to extend their own infrastructure and products globally.”
