The Mexican government has cut the estimated investment required for a wholesale mobile broadband network by almost a third, to USD7 billion, a senior government official informed Reuters this week. The network, which will have exclusive use of a 90MHz block of spectrum in the 700MHz band, was written into Mexico’s constitution in 2013 as part of a sector overhaul designed to curb the dominance of America Movil (AM)-backed Telcel. The plan calls for groups of private companies to bid for the right to build and run the network, which would rent capacity to mobile providers.
However, since the reform legislation was enacted, the Mexican mobile landscape has changed dramatically, with US telecoms giant AT&T Inc putting together back-to-back deals for Iusacell and Nextel Mexico – the country’s third and fourth largest mobile providers, respectively. Monica Aspe, the Undersecretary of Communications at the Secretario de Comunicaciones y Transportes (SCT), told the news agency: ‘Mexico’s telecommunications sector is different today to two years ago, and the tender for the shared network has to recognise that … The network shouldn’t be designed as or perceived as a competitor to the operators that have their own infrastructure, but as an enabler.’
Current government assumptions mean the project would cost around USD7 billion, compared with the original USD10 billion ten-year projection, chiefly because the number of cell towers required will be closer to 12,000 than 20,000. Aspe noted that the network will need some of the incumbent operators to be clients in order for it to reach a 20% to 25% share of the mobile market by revenue within ten years, and thus be profitable enough to be attractive. Further, the network will make the most profit when it covers 85% of Mexico’s population, and will stop being profitable when coverage reaches around 95%.