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After much anticipation, on April 5th, 2005, Mexican telecom regulator Cofetel finally concluded the bidding procedure for additional wireless spectrum in the 1900 Megahertz (MHz) band. Even though the original intent of the auction was to allow the entrance of new competitors into the market, thereby diluting incumbent operator Telcel’s market concentration, this was not accomplished given no new players entered the bid.
By acquiring additional spectrum, Iusacell, Telcel and Telefónica Móviles will be able to add coverage and capacity, enabling them to continue penetrating the population and to push mobile data services more aggressively. Mexico’s penetration, when compared with that of other Latin American countries, remains low. We expect penetration of mobile services to grow at least six percentage points in the next four years, reaching 46% of the population and we expect data revenues to reach US$1.8b by YE2009.
Sincethe existing players have accumulated new spectrum, the three winning operators will be well positioned to continue competing in the market and to begin offering additional services. Telcel obtained 10Mhz in each on the nine mobile regions. Movistar, 20Mhz in regions 3, 5, 7 and 8 and Iusacell, (which currently holds licenses to provide PCS services in Regions 1 and 4) obtained 10 Mhz in 6 regions. New spectrum allows Iusacell to increase its reach and offer services to clients outside its original footprint.
Vendors are certainly happy with the spectrum sale, as it will result in new contracts. Mobile operators will undoubtedly increase their CAPEX, thereby, bringing important opportunities for vendors to bid for contracts to upgrade networks, deploy new networks or supply new services. Ericsson and Nokia, suppliers to leading operators Telcel and Telefonica Moviles, in particular, stand to benefit from the auction.
Related Research:
Communications Markets in Mexico
Mexico Mobile Forecast
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