This is a best prospect industry sector for this country. Includes a market overview and trade data.
Since 2010, the Mexican telecommunications market has consistently outpaced GDP growth, driven in large part by mobile telephony, broadband, and broadcasting. With 121 million active wireless lines, Mexico has a wireless penetration of 96 lines per 100 inhabitants. Eighty-three percent of these are pre-pay lines and 17 percent are post-pay. América Móvil continues to dominate the market with a 62 percent share in terms of number of lines compared to Telefónica’s 21 percent and AT&T’s 15 percent. According to the Mexican Federal Institute of Telecommunications (Instituto Federal de Telecomunicaciones or IFT), in Q3 2019, Mexico had 19 million fixed broadband subscriptions or 55 subscriptions per 100 inhabitants. The technologies employed for connectivity are coaxial cable at 39 percent, DSL at 36 percent, fiber optic at 24 percent and satellite at 0.1 percent. Telmex is the dominant player in fixed broadband with a 50 percent market share in terms of subscriptions compared to Televisa at 24.3%, Megacable at 16%, and Total Play at 8%.
Mexico is the second-largest export destination after Hong Kong for U.S. telecommunications equipment (HS 8517), accounting for 12 percent of U.S. total export sales in this category. The value of U.S. exports of telecommunications equipment to Mexico was USD 2 billion through May 2018, compared to USD 988 million annually in 2017 and USD 1.3 billion in 2016. Growth over the last four years has been driven by recent investments in infrastructure and increased connectivity, as well as competition resulting from a sweeping reform of the telecommunications sector enacted in 2013 and 2014.
Mexico’s telecommunications sector has historically been plagued by near monopolistic agents. By establishing measures to improve competition and strengthening IFT’s regulatory powers, the telecommunications reform created a more attractive investment climate that motivated new players to enter the market. In 2015, AT&T acquired Iusacell and Nextel Mexico, Mexico’s third- and fourth-largest carriers, with a combined market share of eight percent. AT&T has since modernized and expanded its network in Mexico through investments totaling more than USD 3 billion. Mexico’s dominant wireless carrier, Telcel, has in turn invested USD 6 billion in technology and infrastructure.
The Mexican Secretariat of Communications and Transportation (Secretaría de Comunicaciones y Transportes or SCT) awarded the tender for the National Shared Wholesale Network (NSWN), known as Red Compartida in November 2016. Construction of the Red Compartida was mandated by the telecommunications reform to address the reform’s objectives of providing near-universal broadband coverage and increasing access to services in regions neglected by commercial carriers. The Red Compartida is a wholesale-only carrier, deploying infrastructure throughout the country and selling wholesale services to retail commercial carriers and Mexican Government agencies. Two consortia bid on the Red Compartida, and the project was awarded to Grupo Altan. Roll out of the network will continue until a goal of 92 percent coverage by 2024 is provided. At the end of 2019, the network had achieved a coverage of 50 percent.
The current policy of the Mexican Government is to provide universal connectivity, mostly through a program called Internet for All (Internet para Todos), which aims to establish internet hot spots in public areas such as town squares, schools, hospitals, and government buildings. According to SCT, the Internet Para Todos project will be “technology-neutral”. This could include wireless broadband, fiber optic lines, satellites, or other mixed solution and could represent opportunities for U.S. companies. CFE Telecom was established in 2019 as the state enterprise that will provide retail communications services in locations where no commercial services are currently provided.
The telecommunications industry was considered essential to Mexico’s response to the COVID-19 pandemic and has continued operating during the government-mandated lockdown.
Opportunities for television broadcasting equipment have grown since the Mexican Government auctioned two new national television networks. The first was awarded in May 2015 to Mexican media conglomerate Grupo Imagen. The second was divided into 32 channels that were awarded in 2017 to 13 different companies, among them, Mexican companies Telsusa and Grupo Multimedios, who were awarded more than half of the channels. These new players compete with Mexico’s established broadcasters Televisa and TV Azteca.
Radio broadcasting is also expecting infrastructure deployments as IFT is reorganizing the radio broadcasting spectrum to allow more stations to operate. IFT auctioned 191 FM and 66 AM stations in 2016 and is continuing to grant concessions for community radio broadcasters.
For U.S. companies offering software, hardware, or other products or services to operators, the main potential customers in the telecom market in Mexico are the following:
- Wireless telephony. There are seven key wireless players, including Telcel, Movistar, AT& T, Maxcom, and Axtel. The two largest mobile virtual network operators (MVNOs) are Virgin Mobile and Megacel.
- Internet. There are 10 Internet service providers in Mexico: Infinitum (Telmex), Movistar, Maxcom, Axtel, Izzi, Cablevision, Bestel, Megacable, Alestra, and TotalPlay.
- Fixed telephony. There are nine providers of fixed services: Telmex, Movistar, Axtel, Izzi, Cablevision, Bestel, Megacable, Alestra, and TotalPlay.
- Pay TV. Several of the fixed providers also play in the pay TV space: Dish, Maxcom, Axtel, Izzi, Cablevision, Bestel, Megacable, Alestra, and TotalPlay.
- Telco-OTT Providers. OTT or “Over-The-Top” refers to telecommunications service provider that deliver one or more services and/or types of content across an IP (internet protocol) network. OTT providers that offer services in Mexico include Claro Video, Claro Musica, Blim, Spotify, Max Diversion, Axtel TV, Veo, Megacable Play, Netflix, Amazon Prime, Apple TV, and Totalmovie.
The carriers listed above have demand for services in the following areas:
- Business intelligence software
- CATV network applications
- Consulting & IT systems integration; security services; telecommunications infrastructure; leased infrastructure (NOCs, SOCs); maintenance & service
- Tailored software applications for vertical markets
- Training (bundled with an overall solution)
- Wireless applications (mainly focused on mobile broadband, such as TV)
- Data center infrastructure
Service contracts are the predominant business model in the Mexican user market. Software-, Infrastructure-, and Platform-as-a-Service (SaaS, IaaS, and PaaS) will provide the best opportunities. General global technology trends are also reflected in Mexico and will lead to opportunities in several areas:
- Cloud computing and network terminals, using web-based applications
- Green IT equipment for data centers
- Mobile broadband, online advertising, social networks, virtualization
- 3G and LTE (4G) equipment for mobile carriers
- Internet of things
The U.S. Commercial Service Mexico is happy to assist you in exploring telecommunications market opportunities. Carriers are increasing their spectrum capacity and LTE (4G) networks will continue expanding. Telcel and AT&T are expected to deploy 5G networks by . Network and infrastructure projects are carried out by telecom original equipment manufacturers (OEMs) acting as integrators (including Nokia Network, NEC, Cisco, Ericsson, Huawei, ZTE, and Juniper Networks). These OEMs actively pursue opportunities. U.S. companies looking to enter the market can reach out to them directly or partner with smaller local distributors who are vendors for the OEM integrators. Nokia and Huawei are the main equipment providers for the Red Compartida.
Other opportunities include cloud computing solutions, mobile applications, equipment maintenance, services, data centers, and energy-efficiency solutions (hardware, software, and services).
Federal Institute of Telecommunications (IFT)
Mexican Internet Association (AMI)
National Chamber of the Electronics, Telecommunications, and IT Industry (CANIETI)
National Chamber of Cable Television (CANITEC)
Mexican IT Industry Association (AMITI)
- Expo Data Center, 2020 date TBD, Mexico City
For more information on the telecommunications sector in Mexico, please contact:
U.S. Commercial Service—Mexico City
Tel.: +52 (55) 5080-2000 ext. 5215