Introduction
The Mexican telecommunications industry is expected to reduce its investment levels between 2025 and 2027, following an intense infrastructure deployment cycle from 2020 to 2023. This decrease in investment is attributed to uncertainty surrounding the upcoming renegotiation of the T-MEC (United States-Mexico-Canada Agreement) and the high concentration of regulatory powers held by the Agency for Digital Transformation and Telecommunications (ATDT).
Economic Context and T-MEC Renegotiation
Credit rating agency Fitch Ratings states that Mexican fixed and mobile operators prefer to revise their investment plans for at least the next two years due to trade tensions arising from the 2026 T-MEC renegotiation. This could potentially weaken the Mexican peso, leading to increased costs for input purchases and pressure on foreign currency debt repayment.
The Mexican economy is projected to either close in the negative or grow by a mere 0.11% in 2025, contributing to the sector’s cautious approach towards investment.
Impact on Telecom Industry
Analysys Mason predicts that the revenues of telecom companies will grow by 1% between 2025 and 2029 for the mobile segment. This aligns with GSMA estimations that telecom companies’ revenues and investments are impacted, particularly for cellular companies, as spectrum usage costs have increased by 63% over the past decade while average revenue per Megahertz has dropped by 60%.
Investment Trends
- Combined investment by the four major fixed-line companies in 2024 was 1,892.8 million USD, a marginal 0.7% increase from 2023.
- These companies have already decreased their investments by 1.51% in the first quarter of 2025, resulting from the economic context and telecom law modifications.
Regulatory Concerns and ATDT
Fitch Ratings warns that telecom companies fear increased regulatory uncertainty due to the ATDT’s lack of a technical collegiate body to study and resolve contentious issues like spectrum preponderance, substantial power, and concession allocation/revocation.
The Mexican Senate has promised a new face for the ATDT post-modification and approval of the Telecommunications and Broadcasting Act (LMTR), which would include industry demands such as spectrum pricing review. However, Fitch Ratings notes that the ATDT’s creation has increased uncertainty around existing regulations and concessions for telecom operators.
Fitch Ratings Outlook
Despite the uncertain macroeconomic environment, Fitch Ratings remains optimistic about the telecom sector’s stability for the next two years:
- “The credit metrics of Mexico’s telecommunications sector will remain stable over the next two years, supported by growing market penetration and moderate capital investment,” Fitch stated.
- “In the fixed segment, growth prospects are backed by low market penetration and continuous fiber-optic network expansion… In the mobile segment, transitioning to postpaid services offers protection in a market still dominated by prepaid services, which are more sensitive to economic cycles and face increased competition from mobile virtual operators.”
Key Questions and Answers
- What is causing the decrease in telecom investments in Mexico? The primary reasons are uncertainty surrounding the T-MEC renegotiation and high regulatory concentration by the ATDT.
- How will T-MEC renegotiation impact Mexican telecom companies? It could potentially weaken the Mexican peso, leading to increased costs for input purchases and pressure on foreign currency debt repayment.
- What are the investment trends in the Mexican telecom sector? Investments have marginally increased in 2024 but decreased by 1.51% in Q1 2025, reflecting the economic context and telecom law modifications.
- Why are telecom companies concerned about the ATDT? The lack of a technical collegiate body within the ATDT to resolve contentious regulatory issues has increased uncertainty for telecom operators.
- What is Fitch Ratings’ outlook for the Mexican telecom sector? Despite macroeconomic uncertainty, Fitch Ratings expects stability in the telecom sector backed by growing market penetration and moderate capital investment.
