IHS Global Insight Perspective | |
Significance | Telmex has insisted that it only has a narrow joint billing deal with Dish Mexico, but financial reports suggest that the telecoms giant has a far larger stake in the enterprise. |
Implications | Telmex has recently launched a legal challenge against the regulatory decision not to allow it to enter into the pay-TV market. |
Outlook | Megacable has stated that it expects there will be only two players in the Mexico cable market within a few years, adding it could be three if Telmex gets approval for entry into the TV sector. |
The Mexican competition watchdog (COFECO) is planning to launch an investigation into the joint enterprise deal between Telmex and satellite TV provider Dish Mexico, according to a special report by Reuters. COFECO is now examining whether the enterprise is an alliance that breaches fair business rules preventing telecoms operator Telmex from entering the pay-TV market or just a joint billing deal as suggested by Telmex.
Telmex—Mexico's largest telecoms provider owned by the world's richest man, Carlos Slim—has signed a deal with Dish Mexico to offer a cut-rate television service that has proven very successful and gained millions of customers. Telmex has insisted that it only has a narrow deal with Dish Mexico to print a single bill for shared services, but financial reports and remarks from executives indicate that the telecoms giant has a far larger stake in the enterprise.
Outlook and Implications
- Has Telmex Gained Back-Door Entry Into the Television Market? Telmex's rivals have complained to the regulator that the operator's partnership with Dish Mexico is against competition rules, with top TV broadcaster Televisa and its telephone and cable TV allies filing a 115-page complaint with COFECO regarding the alliance earlier this year, while other leading broadcaster TV Azteca recently lodged a similar appeal. Telmex recently launched a legal challenge against a decision not to allow it to enter into the pay-TV market, claiming that the industry regulator supports its view that it has met the conditions necessary to begin offering TV services (see Mexico: 1 June 2011: Telmex to Take Pay-TV Decision to Court). Carlos Slim has recently unveiled plans to increase his investments in Latin America before attempting to break into more developed markets, saying, "The fertile ground is Latin America ….within 10 or 15 years it is going to break the barrier of underdevelopment and it is going to form a large middle class, so we have to invest and invest heavily" (see Mexico: 14 June 2011: América Móvil Tycoon Plans to Invest Heavily in Latin American Telecoms—Report). Slim is confident that Latin America as a whole will develop and is planning to introduce more internet-based and higher-end products, taking advantage of increasingly more affordable devices, applications and content. His company, América Móvil, is Latin America's largest wireless communications provider with 276.5 million accesses, of which 225 million were wireless subscribers as of 31 December 2010.
- Consolidation Under Way in Mexican Telecoms: Fixed-line rival Televisa has revealed that its second-quarter 2011 revenues rose by 4.7% year-on-year (y/y) and says it expects telecoms regulator COFETEL to approve its buyout of mobile operator Iusacell, saying that the deal should go through because Televisa doesn't have a presence in the wireless market (see Mexico: 12 July 2011: Televisa Reports Q2 Revenues Up 4.7%, Expects Regulatory Clearance for Iusacell Buyout). Meanwhile, the chief financial officer of Mexican cable operator Megacable has stated that he is expecting to see a run of mergers in the Mexican cable sector by about 2014 and expects his firm and Televisa to be the only firms left, stating, "I think that in the next two, three years there will be only two players in the Mexico cable market", adding it could be three if Telmex gets approval for its entry into the TV sector (see Mexico: 30 June 2011: Megacable Predicts Mergers in Mexico).
- Development in National Broadband Infrastructure: Mexico's Communications and Transport Ministry recently announced that accumulated investment in 2010 in Red Nacional de Impulso a la Banda Ancha (Red NIBA) reached some 82 billion Mexican pesos (USD7 billion) as the organisation looks to develop a national backbone network consisting of 39 links and points of interconnection, with bandwidth of 1 Gbps to 10 Gbps (see Mexico: 7 July 2011: Investment in Mexican National Broadband Backbone Network Reaches USD7 Bil.). The coverage and capacity of the optical backbone networks need to be enhanced to bring broadband access and related services to remote and rural areas of the country, as well as to support higher bandwidths in metropolitan areas. Between the first quarter of 2010 and the first quarter of 2011, Axtel, Cablemas, Cablevision, Maxcom, Megacable and Telmex added some 1.1 million subscribers to reach 8.7 million customers.