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Mexico Telecommunications Report Q3 2009Product Type: Market Research ReportPublished by: Business Monitor International Published: June 2009 Product Code: R302-7020 Description BMI’s focus in this quarter’s report is on the fixed-line and broadband sectors of the telecoms market.The Mexican fixed-line market confounded expectations in 2008 by registering growth, having declinedin 2007. This was believed to have been the start of the market’s decline but the alternative operators inthe market appear to have reversed that trend. Incumbent Telmex has seen its market share falldramatically and, except for a slight respite in Q308, continues to see its subscriber base decline.However, the incumbent retains over 80% of the market and the two largest alternative operators, Axteland Maxcom, also saw declining numbers of lines in service in 2008. The main cause behind this seemsto have been the introduction of number portability (NP) in July 2008 in which Telmex was initially againer, but later returned to see subscriber losses. Cable TV operators have seen great success of their bundled services, with dual-play and triple-playpackages helping to drive the market’s growth. Telmex is still unable to offer pay-TV services under itsexisting concession and has applied to the regulator, Cofetel, to be able to offer the service, as it believesall interconnection and interoperability requirements were met with the implementation of NP. Telmexhas a joint billing agreement with Dish Mexico to offer pay-TV services with its broadband and fixedlineservices. The move prompted protests from Canitec, the cable operators’ association, which said theincumbent’s concession did not even allow for this type of partnership. Telmex is unlikely to give up onits bid to acquire a broadcasting licence and has previously hinted that its platform is ready to offer IPTV. Although Telmex has faced difficulties in the fixed-line market and barriers to enter the pay-TV segment,it has shown exceptionally strong growth in broadband connections. At the end of 2008, the operator hadover 5mn broadband connections and added around 500,000 new subscribers in each quarter of 2008. Thecompany’s data show that this trend is set to continue in 2009 and it will remain the dominant operator inthis market for some time. However, new operators and new technologies are set to enter the market andshould see even faster growth in broadband connections in Mexico. Fibre-optic networks and WiMAXare two technologies that could have a real impact on the Mexican broadband market and additionalcompetition should help to drive down prices and enable more subscribers to have access to high-speedinternet services. This will of course be limited to some extent by the cost of PC ownership. Mexico retained its second place ranking in our Business Environment Rankings, mostly on the back of ahigher regulatory score. The return to growth of fixed lines in Mexico seems to back Cofetel’s greaterpressure on Telmex and its encouragement of competition in the market. Cofetel is set to auction WiMAXspectrum in 2009 and BMI believes the regulator will be keen to introduce additional competition into themarket to help see the exceptional growth in broadband connections recorded in 2008 continue. Table of Contents
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