Worried by the growing strength of AT&T, América Móvil has set aside $6 billion for bolstering its operations in Mexico. Of the $6 billion, nearly half the amount will be spent on mobile services.
The Mexican telecom market has undergone a sea change after the country reformed its telecom regulations. U.S. telecom giant AT&T was one of the major benefactors after it walked in with the acquisition of Grupo Iusacell and Nextel de Mexico.
In addition to the U.S. giant, América Móvil also competes with Telefonica and the market is also home to a number of MVNOs.
Even to this day, América Móvil, owned by the country’s billionaire businessman Carlos Slim, controls a market share of nearly 68%. But the country’s telecom rules call for restricting the maximum hold of a company in the market to 50%.
For the past two years, industry regulators have been trying to create more competition in the market in a bid to force operators to reduce service price. To begin with, the regulator banned América Móvil from charging national roaming fees. Then it instructed Móvil to share its infrastructure with other operators, particularly in the local loop (last mileage) segment.
To comply with new regulations, América Móvil spun-off its wireless tower division. Reports say the telecom giant may even divest some non-core wireless and fixed-line assets in the future.
Now América Móvil appears to be focusing on building up its wireless infrastructure to counter AT&T, which has been gradually expanding its 4G LTE wireless networks. AT&T has already launched 4G LTE in 12 Mexican cities, and reports say the U.S. firm will have covered most of the cities by the end of this year.
Unlike the United States, Mexico’s telecom market is is still a long way from being saturated. Mobile subscribers in Mexico stood at 73.7 million at the end of last year, up by 3.1% on the previous year, according to Total Telecom.