Recently, Mexico's Secretariat of Communications and Transport (SCT) has confirmed that it will announce the names of the winners of its 700 MHz nationwide shared broadband network on Sep 29, 2016. The SCT was initially slated to declare the tender winners on Aug 24. The SCT cited the number of tenders and the complexity of queries and requests for clarification submitted by the bidders as the primary reason for the delay.
In 2014, the Mexican government had undertaken a massive project of shared wireless network to instil competition in the highly monopolistic telecom industry. The idea was to facilitate small-scale telecom operators to use this state-owned network for their wireless coverage instead of installing their own network, which tends to be a highly capital intensive process.
However, in May 2015, the government of Mexico slashed its planned expenditure from $10 billion to $7 billion for the proposed deployment of the nationwide wholesale mobile network over the next 20 years. The primary reason for the cut in planned expenditure was the government’s belief that 12,000 mobile towers should suffice for the installation of this network as against 20,000 estimated earlier.
The SCT opened the tender for the proposed wholesale shared mobile network project as early as Mar 2015. However, the auction finally materialized on Jan 29, 2016. The SCT has decided to auction at least 90 MHz of spectrum within the 700 MHz-band to cover nearly 98% of the population by 2018.
Various leading telecom infrastructure equipment developers with global operational experience offered bids for the state-owned mobile network project. Notable among them were Ericsson AB (ERIC - Free Report) , Nokia Corp. (NOK - Free Report) , Cisco Systems Inc. (CSCO - Free Report) , Motorola Solutions Inc. (MSI - Free Report) , China Telecom Corp. Ltd. (CHA - Free Report) , Alestra, and Huawei Technologies Co. Ltd. The SCT received 39 tenders from interested parties.
Mexico is the largest economy in the Latin American region with a growing middle class population eager to spend more on high-speed wireless networks to facilitate the use of smartphones and tablets. Also, the wireless penetration rate is relatively low in the country. Given the potential for growth, an investment in the nation may bode well for telecom network equipment manufacturers.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>