The government of Mexico has decided to reform its
telecommunications sector, predominantly the wireline and
wireless phone segments and cable and satellite TV segments. The
Mexican telecommunications sector is highly monopolistic in
nature with one or two companies controlling nearly the whole
market. The new Mexican government, however, wants to increase
competition by encouraging other operators giving them several
level playing fields. This in turn will reduce the costs of
Both the wireless and fixed line markets of Mexico are heavily
controlled by the world's richest person, Carlos Slim. The
America Movil S.A.B.
) commands about 70% market share, while the Spanish wireless
) controls nearly 22% of the Mexican market share. At present,
America Movil has a Zacks Rank #3 (Hold) and Telefonica has a
Zacks Rank #5 (Strong Buy).
In the wireline segment, Carlos Slim owned Telefonos de Mexico
(Telmex), which at present controls 80% of total fixed line
subscribers in Mexico. In mid-2010, Telefonos de Mexico acquired
small sized Mexican wireline operators Carso Global Telecom and
Telmex Internacional or Telint. The acquisitions were among the
biggest consolidations in the Latin American fixed line telecom
On the other hand, the cable and satellite TV market is
predominantly controlled by
Grupo Televisa S.A.
), which controls 70% of the Mexican TV market. Additionally, TV
Azteca, a unit of Grupo Salinas, commands nearly the remaining
30% of the TV market. Thus, Televisa and Azteca form a perfect
duopolistic market structure in Mexico. Televisacurrently has a
Zacks Rank #4 (Sell).
In last June, Televisa won conditional approval from the
Mexican regulator CoFeCo (CFC) to acquire 50% stake in Grupo
Iusacell. The latter is a small wireless operator of Mexico,
which controls around 5% market share. However, Iusacell is a
unit of Grupo Salinas, which also controls TV Azteca. Televisa's
entry will increase wireless competition. Earlier, in 2010,
Televisa abandoned its wireless venture with Nextel de Mexico, a
NII Holdings Inc.
) due to prolonged legal battles. NII Holdings currently has a
Zacks Rank #3 (Hold).
In order to counter Televisa's entry in the wireless market,
Carlos Slim has decided to enter into the Mexican pay-TV market
through its fixed line operator Telmex. However, Telmex pay-TV
venture is yet to get regulatory approval.
AMER MOVIL-ADR (AMX): Free Stock Analysis
NII HLDGS-CL B (NIHD): Free Stock Analysis
TELEFONICA S.A. (TEF): Free Stock Analysis
GRUPO TELEVISA (TV): Free Stock Analysis
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