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Mexico - Market Intelligence Report
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Market Intelligence Reports provide an invaluable mix of vital market data and background information, including telecoms regulation. Mexico's telecommunications market was fully-liberalised in January 1997 and, despite the arrival of a host of would-be competitors into the local and long-distance markets, privatised incumbent operator Telefonos de Mexico (Telmex) remains the dominant operator as network buildout by some new entrants has been comparatively lackluster and interconnection with those alternative carriers that have established themselves (most notably Avantel and Alestra) has been a tortuous process, punctuated by protracted bouts of litigation. Marked facets of the Mexican industry in the last three years include the financial difficulties faced by a number of competitive operators, including Alestra, Avantel and Maxcom, and the concentration of the cellular industry into three main players: Telcel (América Móvil); Telefónica Móviles México; and, Iusacell/Unefon. Consolidation has also been evident in the fixed-line market, with alternative local/long-distance carrier AXTEL acquiring Avantel in December 2006, for US$500 million. The transaction effectively created Mexico's second-largest fixed-line operator, after incumbent Telmex. Nevertheless, with combined revenues of a little over US$1,000 million, the new entity will still be dwarfed by Telmex which has annual revenues of nearly US$15,000 million. Indeed, Telmex continues to be the dominant force in terms of local lines installed, despite the licensing of over 15 competitive operators. At the end of December 2005, the total number of lines in service was 19.512 million, with Telmex accounting for 18.650 million, or 95.6%. By the end of December 2006, there were 19.861 million local lines in service in Mexico, with Telmex having installed 18.284 million of these, representing 92.1% of the market. According to Alestra, Avantel took a 12% share of the national long-distance traffic market in 2005. Following Avantel's acquisition by AXTEL at the end of 2006, Alestra estimated the companies' combined market shares to be 4% in local lines. During 2003, 2004 and 2005, the Secretariat for Communications and Transport (SCT) and the Mexican Congress attempted to reach consensus with the industry to pass a new communications bill but were unsuccessful. In December 2005, The House of Representatives approved a new federal telecommunications bill and the bill was approved by the Senate in October 2006. The bill itself stopped short of full telecommunications reform, instead allowing for the introduction of competition in the local telephony markets by the cable television operators, and changes in the operative rules of the SCT and the Federal Commission for Telecommunications (Cofetel) amending their structure, responsibilities, and faculties, in particular allowing Cofetel to regulate the broadcasting and telecommunications sectors.
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