Mexico - Telecommunication Services: An attractive but price sensitive destination (Strategy, Performance and Risk Analysis)
Within the Mexican telecommunication market, micro-economic conditions have supported policies that favor growth and encourage investments. As such, the market is considered an attractive destination for potential investors. This report provides readers with an in depth analysis into the Mexican market’s current and forecast trends and key developments, exploring the competitive landscape, technological innovations, and growth patterns of different segments, among much more.
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Telcel and Movistar captured 90% of the mobile market
Telcel’s mobile subscriptions recorded a review-period CAGR of 1.0%, growing from 70.4 million in 2012 to 73.2 million in 2016. Subscriptions will post a forecast-period CAGR of 2.6%, to reach 83.4 million in 2021. In an attempt to consolidate its market dominance, Telcel launched new services, including Telcel Pay in 2016. In the same year, Movistar Mexico reported a relatively low churn rate of 50.5%. The market entry of AT&T via the acquisition of Lusacell in 2014 and Nextel in 2015, has allowed the firm to gain an initial 10% share of the mobile market. AT&T’s entry further intensified price competition.
Weak competitive position in mobile adoption
Compared to the global and regional average, mobile adoption in Mexico is relatively low, which results in relatively lower subscription base. Subscriptions registered a review-period CAGR of 2.7%, while North American mobile subscriptions posted a CAGR of 5.9% and global subscriptions rose at a CAGR of 4.2%. Mobile penetration grew from 63% in 2012 to 66% in 2016, while the regional average increased from 75% to 80%. Multi-sim ownership is less common in Mexico.
Fixed residential internet revenue to exceed voice revenue
At US$2,893.3 million in 2016, fixed residential internet revenue accounted for 77.9% of the total fixed-line residential service revenue, and 71.2% of total fixed-line internet (residential and business combined) revenue in 2016. Fixed residential internet revenues rose from US$2,404.0 million in 2012 to US$2,893.3 million in 2016 at a CAGR of 4.7%, and will post a forecast-period CAGR of 5.2% to value US$3,730.8 million in 2021.