Background on Megacable Holdings and its Relevance
Megacable Holdings, a significant player in Mexico’s telecommunications industry, is the fourth-largest fixed telephony operator and third-largest broadband internet provider. It ranks as the fifth-highest revenue-generating company in the telecom sector. Megacable has been one of the most investment-intensive companies in developing fixed networks in Mexico, with a quinquennial investment plan of 2.5 billion dollars from 2022 to 2027. The company invested 118 million dollars in its fiber-optic networks alone during the first quarter of 2025.
Concerns Regarding CFE’s Entry into Fixed Internet and Telephony Services
Megacable’s CEO, Enrique Yamuni, expressed concerns about the potential risks to market competition and public finances if the Mexican government, through the Federal Electricity Commission (CFE), decides to commercialize fixed internet and telephony services. CFE already possesses essential infrastructure, including fiber-optic cables under modernization, which could enable such a plan.
Yamuni’s Statement:
“If the government decides that Altán with CFE will handle the last-mile wired infrastructure, we could all be affected… With this reform, if it passes as is, Mexico will not be an attractive country for investment.”
Impact on Market Competition and Investment Recovery
Megacable warns that CFE’s entry into the fixed market would create unfair competition, especially since the fixed market is still recovering from a slow 2024 due to Mexico’s economic deceleration. The company recommends that the government opt for public-private partnerships to develop infrastructure for social coverage instead of allowing CFE to initiate unfair competition.
CFE’s Existing Mobile Internet Services and Proposed Social Coverage
CFE, through CFE Telecom e Internet para Todos, has already distributed mobile internet services by providing free SIM cards in rural and semi-rural communities, which are also used in urban areas. CFE Telecom now operates nationwide, causing distortions in the mobile market, as claimed by cellular business companies. The government promises that if it later accesses spectrum for 4G and 5G mobile services, it will be under the same conditions as private companies.
The federal government has diagnosed that 14.6 million Mexicans lack adequate internet access and plans to develop social coverage to bring internet to them. One proposed method is using CFE’s infrastructure, although this would consume significant state electricity company budget.
CFE’s Current Infrastructure and Potential for Expansion
CFE currently has 41,737 kilometers of fiber-optic cables and around 143 telecom hotels, along with a fleet of 948 SDH network equipment and over 1,100 MPLS-TP devices for data transmission. Combined with the national transmission network of 106,909 kilometers, CFE could potentially extend internet coverage to unconnected Mexicans. However, laying last-mile cables from central stations to consumers’ homes remains technically challenging and expensive.
Megacable’s Investment and Market Presence
Megacable’s network currently reaches 17.43 million households through 158,000 kilometers of fiber-optic cables. Izzi Telecom covers over 122,000 kilometers, while Totalplay extends across 141,000 kilometers. Telmex leads the sector with nearly 400,000 kilometers of aerial and underground cables.
Recommendations for Public-Private Partnerships
Yamuni emphasizes that the government should prioritize public-private partnerships for last-mile infrastructure development for social coverage instead of allowing CFE to create unfair competition. He also points out that the current economic situation in Mexico makes it unfeasible for the government to finance these investments alone.
Key Questions and Answers
- What are Megacable’s concerns regarding CFE’s entry into fixed internet and telephony services? Megacable fears unfair competition and potential negative impacts on public finances if CFE enters these markets.
- Why is Megacable concerned about CFE’s existing mobile internet services? CFE’s distribution of free SIM cards in rural areas and subsequent urban usage has caused distortions in the mobile market, according to cellular business companies.
- What is Megacable’s recommendation for social coverage infrastructure development? Megacable suggests public-private partnerships as the best approach for developing last-mile infrastructure for social coverage.
- Why is Megacable against CFE financing last-mile infrastructure alone? Given Mexico’s current economic situation, Megacable believes it would be too expensive and challenging for CFE to finance last-mile infrastructure alone.
