Introduction
Mexico’s cautious development of 5G networks stems from economic-financial reasons rather than technical factors, as it is one of the world’s leading markets for deploying new technologies. Five years after the initial 5G service launches, Mexico had only 21 million active 5G accesses by Q1 2025, while Brazil reached 44 million in the same period and started commercializing its 5G services in 2022 following a successful spectrum auction in 2021.
Economic Context and EBITDA Margins
Mexico’s tax policy for spectrum frequency utilization and low EBITDA margins, an indicator measuring a company’s efficiency and strength for investment and growth in sectors like telecommunications, pose challenges for advancing 5G development. Economists suggest that a minimum acceptable EBITDA margin for new projects should be around 29%, but two of Mexico’s top three operators have margins below these levels.
- Telefónica: 9% EBITDA margin
- AT&T: 20% EBITDA margin
- Telcel: More than 40% EBITDA margin (as of Q1 2025)
According to Omdia research, Mexican companies have been cautious due to the mobile market not experiencing its best period of prosperity. Factors like COVID-19, economic slowdown, inflation pressures, and regulatory authority changes have affected Mexico from 2020 to 2025.
Operator Strategies and 5G Deployment
Operators like AT&T have been cautious, initially limiting 5G access to postpaid customers. For example, AT&T took four years to extend 5G availability to its 17.6 million prepaid subscribers, doing so only in Q1 2025.
- Slow network expansion: AT&T’s coverage increased from 31 cities in 2022 to 56 cities by Q1 2025.
- Telcel maintained broader coverage, reaching 125 cities by Q1 2025. Telefónica, operating through AT&T’s infrastructure, had 5G coverage in 38 cities.
Telcel’s higher EBITDA margins have allowed it to access spectrum, pay for this resource, and leverage its scale advantages to advance faster with 5G development.
Brazil’s Different Scenario
In Brazil, the leading market players have distinct economic, social, and public policy realities compared to Mexico. Brazil is considered a third-market scenario due to its strong positioning.
The three main Brazilian operators have EBITDA margins above 45%, providing them with opportunities to invest in innovation, new services, and maintain market activity.
As of the beginning of 2025, Mexico and Brazil held 79% of all available 5G connections and 51% of total mobile service connections in the Latin American region. Omdia estimates that by 2030, Latin America will have around 931 million cellular service connections, with 592 million being 5G. However, obstacles still need to be resolved in the region.
Operators with market shares below 30% are more likely to have EBITDA margins also below 30%, a direct result of highly competitive markets often experiencing price wars for years and inefficient policies.
Key Questions and Answers
- What are the main reasons for Mexico’s cautious 5G development? Mexico’s fiscal policy and low EBITDA margins pose challenges for advancing 5G development.
- How do EBITDA margins of Mexican operators compare to Brazilian ones? Two of Mexico’s top three operators have EBITDA margins below 29%, while Brazil’s leading operators have margins above 45%.
- What factors have influenced operator strategies in Mexico and Brazil? Factors like COVID-19, economic slowdown, inflation pressures, regulatory changes, and market competition have affected both countries.
