Introduction
The telecommunications sector has shown a short memory, as evidenced by the recent stir caused by Telefónica’s executive repeating his decision to leave Latin America and AT&T’s president, Mónica Aspe, expressing little interest in participating in Mexico’s 5G spectrum auction.
Telefónica’s Exit from Latin America
In 2019, Telefónica created a unified group encompassing all its Hispanic markets, focusing on high-growth and high-revenue markets. This strategic move aimed to streamline operations, leaving non-core markets open for sale. Telefónica’s announcement of its exit from Hispanoamerica, excluding Brazil, signaled a shift in priorities towards these key markets.
Challenges in Latin American Markets
The telecommunications sector in Latin America has long faced asymmetrical treatment from government authorities, making it difficult for operators to compete. Telefónica’s struggles can be traced back to strategic missteps, such as aggressive subsidies for mobile phones and poor administrative decisions. The disparity in user profiles between Mexico and other regions has resulted in varying average revenues per user.
AT&T’s Limited Interest in Mexico’s 5G Auction
AT&T’s president, Mónica Aspe, has expressed minimal interest in participating in Mexico’s 5G spectrum auction due to its revenue-focused nature. According to the Mexican Telecommunications Regulatory Commission (CRT), the price for mobile spectrum in Mexico is only 7% of the global average.
Implications of Limited Participation
Should the auction be suspended, Mexico’s 5G deployment would face significant delays in terms of coverage and user adoption, as well as the version of 5G offered. This would leave Mexico lagging behind countries that have already implemented extensive and robust 5G deployments.
Impact on Competition
Suspending the auction would strengthen Telcel’s market dominance, as it already utilizes part of the 3.5 GHz spectrum reassigned through technical reallocation. Meanwhile, competitors like AT&T, regional operators, and wholesaler Altán would miss out on accessing new spectrum, deepening market asymmetry.
CRT’s Dilemma
The CRT faces a challenging task: securing spectrum allocation to boost 5G growth without relying on 4G infrastructure reutilization. A suspended auction would limit competition, hindering AT&T and Altán’s ability to expand and improve services.
Broader Implications for Mexico’s Digital Transformation
5G is crucial for Industry 4.0 advancements, as it drastically reduces data transmission costs (unattainable with 3GPP version 15). Without a successful auction, Mexico’s digital transformation would slow down, forcing businesses to rely on 4G or limited private networks, reducing their international competitiveness.
Call for Transparency and Clear Rules
The market anticipates a transparent decision-making process regarding auction participation and spectrum distribution. Clear rules and transparency enable operators to make informed decisions, fostering a more competitive and innovative telecommunications landscape.
Key Questions and Answers
- What is the main issue with Telefónica’s exit from Latin America? Telefónica’s strategic shift to focus on high-growth markets like Spain, Brazil, Germany, and the UK has left non-core regions open for sale.
- Why is AT&T’s limited interest in Mexico’s 5G auction a concern? A suspended auction would limit competition, hindering AT&T and Altán’s ability to expand and improve services.
- What are the broader implications of a delayed 5G deployment in Mexico? Slow digital transformation would force businesses to rely on less competitive 4G networks, reducing Mexico’s international competitiveness.
- What does the market expect from the CRT regarding the auction? The market anticipates transparent decision-making and clear rules for spectrum distribution, enabling operators to make informed choices.
