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Mexico to Complete Switchover of TV Signals by 2016-End

T TEF TV AMX

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Mexican telecom regulator -- Federal Telecommunications Institute (IFT) -- recently reaffirmed that the conversion of analog TV signals to digital signals across the nation, will be completed by the end of this year. The process will come to a conclusive end when a total of 460 low-power TV stations will switch off their signal. The regulator said 303 of the stations – mostly regional, educational and social TV operators – will cease broadcasting on Dec. 15, followed by the rest on Dec. 31.

The IFT had planned to complete TV digitization by the end of 2015. However, in Dec 2015, Mexican senators voted in favor of extending the deadline of the conversion of TV signals from analog to digital by the end of 2016. The decision was taken on the grounds that an attempt to meet the Dec 31, 2015 deadline would leave millions of viewers across the nation without TV access.

The switchover to the digital format will free up important 700 MHz spectrums which the government of Mexico intends to use for installing a nationwide wholesale wireless network. Mexico's Ministry of Communications and Transport (SCT) has conducted an auction for the 700 MHz shared broadband network.

In 2014, the government had undertaken this massive project to instil healthy competition in the highly monopolistic telecom industry. Small-scale telecom operators can use this state-owned network for their wireless coverage instead of installing their own network which is a highly capital intensive process. In Mar 2015, the SCT offered tender inviting participation in the project.

In May 2015, the Mexican government slashed its planned expenditure from $10 billion to $7 billion for the proposed deployment of nationwide wholesale mobile network over the next 20 years. The primary factor responsible for the cut in planned outlay was the government’s changed belief that 12,000 mobile towers will be sufficient for installing this network as against 20,000 estimated earlier.

Meanwhile, Mexican wireless market is currently controlled by America Movil SAB (AMX - Free Report) , AT&T Inc. (T - Free Report) and Telefonica SA (TEF - Free Report) . All three stocks currently carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. In addition, Grupo Televisa SA (TV - Free Report) received IFT’s permission to enter into the fray although management is yet to take any decision regarding it.

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 for optimal use of smartphones and tablets. Further, the wireless penetration rate is relatively lower in this country. Consequently, an investment in the nation with these positives is likely to bode well for telecom operators.

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