Background on Spectrum Pricing in Mexico
The Mexican government, led by President Claudia Sheinbaum, has decided not to lower the prices of spectrum for 2026. This decision makes 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. The high spectrum costs in Mexico have resulted in the loss of $738 million in tax revenue from 2020 to 2024 due to telecom companies relinquishing their spectrum concessions.
International Comparisons and Impact
Mexico’s spectrum costs are among the highest globally, with annual payments for spectrum rights accounting for 85% of the total cost to exploit a radio frequency band during a concession period. This is significantly higher than the Latin American average of 20%, as reported by organizations like the OECD and GSMA. These high costs are estimated to have prevented 5 million Mexicans from accessing 4G-LTE services.
Government Pressure and Policy
Despite pressure from the Trump administration to address non-tariff barriers, including high spectrum costs, President Sheinbaum’s tax policy on spectrum pricing for 2026 has remained unchanged. This means that 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
The current governments of Andrés Manuel López Obrador and Claudia Sheinbaum have utilized less spectrum compared to the previous priista government under Enrique Peña Nieto. During Peña Nieto’s term, 660 MHz of spectrum was in use for Mexican telecommunications. López Obrador inherited 500.9 MHz from Sheinbaum.
Sheinbaum’s Proposals for the Telecommunications Industry
President Sheinbaum proposed two significant initiatives to the Chamber of Deputies regarding the Federal Rights Law (LFD) for 2026: maintaining current spectrum usage quotas to safeguard public access to telecommunications and offering tax incentives for operators extending coverage to underserved digital populations and building “smart networks.” These smart networks could include private telecommunications infrastructures that boost Mexico’s industrial parks in the context of nearshoring.
Incentives for Operators
These proposals aim to stimulate Mexico’s telecommunications industry, particularly the upcoming 5G spectrum auction by ATDT. The incentives would encourage private investment to extend coverage in underserved areas. However, the proposal does not clearly outline how a hypothetical operator like Altán would participate in acquiring capacity bands for 5G in unserved regions, despite state involvement as a major shareholder.
New Regulatory Framework
President Sheinbaum also proposed a regulatory framework to support the new tax policy on incentives. This would allow for discounted spectrum rights for operators demonstrating coverage obligations in specific geographical areas, highways, and other designated regions determined by the Telecommunications Regulatory Commission (CRT).
Tax Discount Levels
The Secretariat of Finance and ATDT, in accordance with CRT guidelines, will determine the discount levels for private and public operators. Once the Congress approves the new regulatory framework, federal agencies will decide on the discount amounts to make the upcoming 5G auction more appealing.
Key Questions and Answers
- What is the main issue regarding spectrum costs in Mexico? High spectrum costs have led to significant tax revenue loss and hindered connectivity for millions of Mexicans.
- Why hasn’t the Mexican government lowered spectrum prices? The current macroeconomic context, including a fiscal deficit equivalent to 4.3% of the GDP and the need to increase net spending by 5.9% in 2026, has prevented spectrum price reductions.
- What are President Sheinbaum’s proposed initiatives for the telecommunications industry? Sheinbaum has proposed maintaining current spectrum usage quotas and offering tax incentives for operators extending coverage to underserved areas and building smart networks.
- How will the new regulatory framework impact spectrum incentives? The Congress will approve a new norm allowing for discounted spectrum rights based on coverage obligations in specific regions, determined by the CRT.
