The government of Mexico has decided to reform its
telecommunications sector, predominantly the wireline and
wireless phone segments and the cable and satellite TV segments.
The telecommunications sector in Mexico is highly monopolistic
with one or two companies dominating the market.
The Mexican government, however, intends to increase
competition by encouraging the entry other operators. This in
turn will reduce the costs of telecom and broadcasting
In this regard, regulator Federal Telecommunications
Institute, which is popularly known as IFT, identified telecom
America Movil S.A.B.
) and broadcasting giant
Grupo Televisa S.A.B.
) as the dominant players in the respective markets.
America Movil's wireline division, Telmex, currently control
around 80% of the Mexican market, whereas its wireless division,
Telcel, holds about 70% market share. On the other hand, Televisa
currently dominates approximately 70% of the Mexican broadcasting
and pay-TV market. The IFT wants to restrict the maximum hold of
a company in a market to 50%.
As stringent measures, IFT will ban America Movil from
charging national roaming fees. Further, the company will have to
share its infrastructure with other operators particularly in the
local loop (last mileage) segment. Interconnection fees levied by
America Movil will also be closely monitored.
Similarly, Televisa has to share its broadcast towers with
competitors for a stipulated amount of fees. Moreover, Televisa
will not be allowed to acquire exclusive broadcasting rights of
popular sports and entertainment events such as world cup
The new telecommunications industry reform bill of the Mexican
government may pave the way for Televisa to capture a large chunk
of the wireless market share. In 2010, Televisa abandoned its
wireless venture with Nextel de Mexico, a subsidiary of
NII Holdings Inc.
) owing to prolonged legal disputes.
Currently, the company holds a 50% stake in Grupo Iusacell, a
small wireless operator of Mexico. However, Bloomberg reported
) is negotiating with Televise and Grupo Salinasto, the remaining
50% stake holder of Iusacell, to acquire the company.
The new regulations will also allow America Movil to enter the
broadcasting market of Mexico, which has been controlled by
Televisa for a long time. This may substantially reduce
Televisa's advertisement revenues. In fact, America Movil had
been eager to enter this market with its existing telecom network
Currently, both America Movil and NII Holdings carry a Zacks
Rank #3 (Hold) while Televisa and Telefonica carry a Zacks Rank
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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