the internet market impact of mexico telecom reform€¦ · office: +1 603 643-9300 x125 the...

© 2013 Renesys Corporation Capacity North America 1

Speaker: Michael J. Miller, CISSP [email protected] Office: +1 603 643-9300 x125

The Internet Market Impact of Mexico Telecom

Reform Capacity North America – October 23rd, 2013


May was one of the worst months for Mexican telecom mogul Carlos Slim. For the first time in four years, Slim was bumped from his perch as world’s richest person by Microsoft co-founder Bill Gates, a position Slim had held since 2010 when the value of his mobile phone carrier América Móvil (NYSE:AMX) soared.

May 20th

Source: Yahoo Finance


Mexico Telecom Reform


Reformer – President Enrique Peña Nieto

57th president of Mexico •  Six year term began on Dec. 1st, 2012 •  Member of the Institutional

Revolutionary Party (PRI) •  Former governor of the State of

Mexico from 2005 to 2011 •  Law degree from Universidad

Panamericana, and Master's degree from the Monterrey Institute of Technology and Higher Education

•  Born July 20th 1966 (age 47)


Mexico Telecommunication Reform - Timeline

1st Dec. 2012 Enrique Peña Nieto Takes office

21st March 2013 Lower House passes Telecom Reform

30th April 2013 Senate passes Telecom Reform

12th June 2013 Telecom Reform becomes Law

Within 6 months Federal Institute of Telecommunications (IFETEL) to identify dominant provider recommendations


Mexico Telecommunications Reform 2013

Key Elements: •  Elimination of the cap on foreign ownership in telecom services •  No provider can have more than 50% of the market share •  New regulatory authority to identify dominant providers

•  Federal Institute of Telecommunications (IFETEL) •  New broadband infrastructure open to competition •  Effective dispute resolution and enforcement

Main goal: To increase competition in the Mexico telecommunication market in order to increase the number of people and businesses that have

access to the Internet and reduce the cost.

On June 10th, 2013, President Enrique Peña Nieto signed the Telecommunications Reform act into law.


Six Precepts of Telecommunications Reform

1.  Strengthening fundamental rights 2.  Updating the legal framework 3.  Strengthening the institutional framework 4.  Promoting competition 5.  Establishing a Universal Digital Inclusion Policy

and a National Digital Agenda 6.  Promoting greater coverage in infrastructure


Internet Analysis of Mexico


Mexico Internet Market

•  Privatized in 1990 •  Telmex / Uninet is the

primary Mexico Internet provider

•  The gap in the market is expansive

•  Too early to see a change in the Internet market


Overall Telecommunications Market

OECD (2012), OECD Review of Telecommunication Policy and Regulation in Mexico, OECD Publishing. http://dx.doi.org/10.1787/9789264060111-en


Market Comparison

…said Clinton Carter, director of research at Frontier Strategy Group, in an interview "A lot of funds are looking into Latin America as sort of a portfolio of opportunities. Brazil became a lot less attractive in the last year and a half, Mexico has definitely come up as a priority.” Source: Anna Andrianova, CNBC.com

Mexico

Brazil


Provider Profiles


Telmex / Uninet (AS 8151)

•  Prior to 1990, the Mexican telecommunications market was a monopoly served solely by state-owned Teléfonos de México (Telmex).

•  In 1990, Telmex was privatized and sold to Grupo Carso, a conglomerate company owned by Carlos Slim Helú, the world’s second richest man.

•  It is estimated that Telmex serves anywhere from 80% to 95% of all fixed lines in Mexico


GrupoTelevisa (Multiple Networks)

•  Televisa is the largest mass media company in Latin America and the Spanish speaking world.

•  Televisa is Mexico’s second largest Internet provider based on the aggregate number of IP addresses.

•  Televisa has two cable TV providers, Cablemás and Cablevisión, which together give it a 45% pay-TV market share.

Televisa IP Addresses % of Total

Bestal (AS 18734)

2,485,504 9.2%

Cablemás (Multiple ASNs)

669,184 2.5%

Cablevisión (Multiple ASNs)

316,672 1.2%

Iusecell (AS 17072)

11,520 0.0%

Total 3,482,880 12.9%


Axtel (AS 6503)

•  Axtel is Mexico’s second largest fixed line operator after Telmex and serves about 5% of the fixed-line market.

•  BBVA Research recently stated Axtel’s “weak competitive position and its limited infrastructure require strong investment in Capex to increase their core business


Megacable (AS 13999)

•  Megacable is the largest cable television operator in Mexico, offering service in 48 major cities.

•  With Televisa and Movistar/Telefonica, Megacable is a member of the “Grupo de Telecomunicaciones de Alta Capacidad” or GTAC


Competitive Analysis


Changes in the Market

The Mexico market has remained relatively unchanged throughout the year. Real change is going to take investment and time before you see any significant shift in the market.

the internet market impact of mexico telecom reform€¦ · office: +1 603 643-9300 x125 the...

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