Mexico Unveils Spectrum Bidders - Analyst Blog

Mexican telecom regulator Cofetel has divulged the names of the potential bidders for the upcoming wireless spectrum (radio airwave) auction in the country. Seventeen companies have already enrolled to bid for the auction, which is expected to conclude by June-end 2010.
 
Interested bidders have to file the necessary documentation with the Mexican antitrust watchdog Federal Competition Commission (CFC) by March 2, 2010. Bidders have to be approved by the CFC to compete in the auction.
 
According to Cofetel’s website, Latin American telecom heavywieghts America Movil (AMX) and Telefonica (TEF) are among the bidders. Moreover, smaller telephone and cable operators have registered for the auction. Mexican broadcaster TV Azteca, cable operator Megacable, fixed-line operator Axtel SAB and cellular operator Grupo Iusacell have also filed the required documentation.
 
Mexico’s largest media company Grupo Televisa (TV) is the other leading participant in the auction. To enter the lucrative Mexican wireless market, Televisa has recently signed a pact to acquire 30% stake in Latin American wireless operator NII Holdings Inc’s (NIHD) wireless arm Nextel Mexico.
 
Televisa is expected to begin offering wireless services in Mexico through its cable unit Cablevision in first-half 2010. Televisa and Nextel Mexico have jointly bid for the spectrum auction to build a nationwide 3G network. The joint venture will offer quadruple-play services (wireless, video, data and fixed-line voice) in Mexico.
 
Cofetel will auction radio-electric spectrum to the qualified bidders in two separate auctions. In the first auction, the regulator will offer nine blocks of frequencies in the 1850 MHz (megahertz) – 1990 MHZ. Cofetel will sell seven blocks of spectrum between 1710 MHz and 2170 MHz band in the second auction. Eventual winners at the second auction will get nationwide coverage and secure the necessary capacity that supports advanced 3G data services.
 
With roughly 74% mobile penetration, the Mexican wireless market offers ample room for growth. America Movil’s Mexican subsidiary Telecel currently dominates the market with a 72% share followed by Telefonica with a 20% share. Telefonica’s Mexican unit Movistar is desperately seeking more 3G frequencies to roll out advanced data services in Mexico City, which will enable it to more effectively compete with Telcel.
 
The upcoming spectrum auction will open the Mexican wireless market to more competition and reduce monopolism in the industry. Moreover, it will further boost wireless demand in Mexico as 3G services enable wider access to advanced data applications.
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