Background on Spectrum Costs in Mexico
Mexico’s government has decided to maintain high costs for radio frequency spectrum in 2026, making it unlikely that the upcoming 5G auction by the Digital Transformation and Telecommunications Agency (ATDT) will attract new international players or secure the interest of Telcel and AT&T. This decision comes as Mexico has lost out on $738 million in taxes from 2020 to 2024 due to telecom companies relinquishing their high-frequency spectrum concessions.
Current Spectrum Costs and International Comparisons
Despite the high costs, Mexico’s spectrum remains among the most expensive according to international measurements. The annual payments for spectrum rights set by the Mexican government account for 85% of the total cost to exploit a radio frequency band during a concession’s validity period, which is significantly higher than the Latin American average of 20%, as reported by organizations like the OECD and GSMA. These estimates suggest that 5 million Mexicans could join the 4G-LTE network if spectrum prices were more affordable.
Government Pressure and Policy Decisions
Although former U.S. President Donald Trump pressured Mexico to address non-tariff barriers, including high-frequency spectrum issues, this pressure did not influence President Claudia Sheinbaum’s tax policy on spectrum valuation for 2026. Consequently, Mexico will have gone two decades without a comprehensive review of spectrum prices, potentially stifling investments and connectivity for Mexicans.
Spectrum Usage Under Current Governments
Under the administrations of Presidents Andrés Manuel López Obrador and Claudia Sheinbaum, Mexico has used less spectrum compared to the previous priista government. Enrique Peña Nieto’s administration ended with 660 MHz of spectrum in use, while López Obrador inherited 500.9 MHz from Sheinbaum.
Sheinbaum’s Proposals for the Telecommunications Industry
President Sheinbaum proposed two significant proposals through the Ministry of Finance to the Chamber of Deputies regarding the Federal Rights Law (LFD) for 2026:
- Maintaining the same spectrum usage and possession quotas to safeguard the population’s right to telecommunications access.
- Fiscal incentives for operators who commit to covering underserved digital populations and building “smart networks,” such as private telecommunications networks that could boost Mexico’s industrial parks in the context of nearshoring.
These proposals could provide much-needed support for the upcoming 5G spectrum auction, designed by the new federal government through ATDT. The first-ever Mexican 5G spectrum auction, following several failed attempts since 2019, aims to allocate spectrum that has consistently been offered at high prices, despite the availability of numerous national and regional blocks for coverage and capacity services.
Fiscal Incentives Norma Proposal
President Sheinbaum proposed a regulatory norm to support the new fiscal incentives policy to Congress. This norm would allow for discount allocations to frequency band concessionaires who commit to coverage obligations in specific geographical areas, roads, paths, and other designated regions determined by the Telecommunications Regulatory Commission (CRT).
Spectrum Usage and Investment Implications
The proposed fiscal incentives aim to encourage commercial and social operators, both large and small, to compete for radio frequency bands to provide coverage in underserved areas, primarily through private investments. However, the proposal does not clearly outline how a hypothetical operator like Altán could access capacity bands for 5G in unserved regions where the state is the primary shareholder.
Additional Considerations
President Sheinbaum also requested Congress to consider a new figure for intelligent network concessions, aiming to boost investments in this field by numerous companies. However, this topic might create friction among major operators like Telcel or AT&T, who have experienced lean income years due to the high-frequency spectrum policy. These operators might prefer incentives encouraging companies like them to develop private networks.
