Mexico: Telecom Reform Promotes Operator Competition as America Movil, Televisa Battle for Leadership

Product Synopsis
A new telecommunications law is paving the way for fundamental changes in the Mexican telecom market. The competitive dynamics will increasingly be characterized by competition between two giants, America Movil and Televisa, with the gap between the two narrowing over the next five years. Still, we do not expect the mobile penetration rate to pass 100 percent until 2015. We believe pay-TV will be one of the fastest growing sectors.

Introduction and Landscape
The Mexican telecom market generated $26.6bn in service revenue in 2012, a 2.0% increase over 2011 levels. Although mobile operators recovered after a difficult 2011, fixed operators struggled given greater than expected declines in traditional voice revenue. We expect the market for telecom services to expand at a CAGR of 4.2% between 2012 and 2017, reaching $32.8bn at the end of the period. Data services will be the main engine of growth, with fixed and mobile data service revenue combined increasing at a CAGR of 9.7% over the 2012-2017 period. Although smaller, the pay-TV market will also be an important engine of growth, with revenue slated to grow 49% between 2012 and 2017, topping $4.2bn in 2017. Additional spectrum in the 700MHz and 2.5GHz bands will be auctioned in the near term, helping mobile data services, specifically mobile broadband, grab a larger slice of Mexico's overall revenue pie. By 2017, we expect mobile data services to generate $8.5bn in revenue, making it the second largest market segment after mobile voice.

Executive Summary
Market and Competitor Overview
Mexico in a regional context
Economic, demographic and political context
Regulatory environment
Demand profile
Service evolution
Competitive landscape
Major market players
Segment analysis
Mobile services
Fixed services
Pay-TV
Convergence
Identifying Opportunities