2011 Mexico - Telecoms, Mobile, Broadband and Forecasts

Mexico setting the stage for increased mobile sector competition

BuddeComm’s annual publication, ‘Mexico - Telecoms, Mobile, Broadband and Forecasts’, profiles the fixed-line, mobile and broadband markets in Mexico. The publication also examines the convergence of these technologies with each other and with digital media such as digital TV and the emergence of new telecommunication services such as VoIP.

Mexico’s GDP plunged 6.5% in 2009 however recorded positive growth of 5% in 2010, with exports leading the way, while domestic consumption and investment lagged. As the economy recovers, ongoing economic and social concerns include low real wages, underemployment for a large segment of the population and inequitable income distribution. In the lead up to the 2012 elections, top economic priorities remain reducing poverty and creating jobs.

In relation to the telecommunications industry specifically, industry growth has long outpaced the broader economic growth. For instance in the decade from 1990 to 2000, the industry grew at an average three times faster per year then the broader economy. The robust growth of recent years has been driven primarily by the mobile and broadband sectors.

The predominance of mobile phones over fixed lines, prevalent in all of Latin America, is expected to continue in Mexico. The satellite TV broadcasting sector will continue to enjoy robust growth in 2011/12 and cable TV companies will continue to drive the growth in VoIP and triple play services.

This report contains overviews, analyses and detailed statistics of the Mexican fixed-line, mobile, digital broadcasting and broadband markets including developments in emerging technologies such as wireless broadband and VoIP and scenario forecasts for the mobile and broadband markets.

Market highlights:

• Into 2011 Mexico’s telecommunications industry maintained double figure annual growth.
• Mexico remains the last country in the OECD yet to unbundle its local loop. Thus despite liberalisation, Telmex still dominates the fixed-line market with over 80% of lines. Teledensity continues to languish at approximately 17%, around average for Latin America. Moreover, there are significant disparities in fixed-line penetration between urban and rural areas.
• The mobile sector remains one of the main drivers of telecom industry growth and grew at approximately 10% per annum, achieving more than 85% penetration by mid 2011.
• By 2011 Telmex’s sister company, América Móvil (Telcel), still accounted for 70% of the mobile market.
• Telefonica’s Movistar was successful in spectrum auctions in 2010 and the market is set for further upheaval after Televisa bought a 50% stake in Iusacell thus injecting capital for investment.
• Broadband is the other principal driver of growth in Mexico’s telecommunications market. Both cable modem and ADSL continued to enjoy strong subscriber growth into 2011 at a combined average growth rate of over 20%.
• The main cable TV providers, Megacable, Cablemás and Cablevisión, were making strong gains by successfully incentivising the purchase of triple play bundles of cable TV, broadband and telephony. As a result their broadband subscriber base and in particular their VoIP subscriber numbers witnessed healthy growth during 2009 and into 2010 although this had dropped off moving into 2011.
• During 2009 the DTH satellite TV market enjoyed some of its highest growth rates for the decade, following the entry of Dish Mexico in 2008. Into 2011 sectoral growth remained at 10% in the first quarter.
• Regulatory gamesmanship continues to typify the sector and Cofetel still requires greater independence and regulatory power in order to be able to properly foster a more competitive market.

Forecast mobile subscribers and penetration lower growth scenario – 2010 - 2012; 2016

(Source: BuddeComm forecasts)

Notes: BYE is Base Year Estimate.

Data in this report is the latest available at the time of preparation and may not be for the current year.