Mexico’s telecom regulatory authority, the Federal Telecommunications Institute (IFT), has recently started public consultations for the upcoming auction of wireless spectrum (airwave) in the 2.5GHz (2500-2690MHz) frequency band. The auction process was deferred twice to the third quarter of 2017 due to the bidding schedule for 4G LTE shared wireless network, using 90 MHz of spectrum within the 700 MHz-band. Notably, wireless spectrums of 2.5 GHz band are highly suitable for the deployment of 4G LTE networks.
The IFT has decided to auction a total of 120MHz spectrums on the 2.5GHz band in six blocks of 20MHz each. This will include four for FDD-LTE services and two for TDD-LTE. The concessions will be for 20 years and the minimum value of each block will be MXN 350 million. Interested bidders can submit their opinions on the consultation by Sep 04, 2017.
In Jul 2017, America Movil SAB (AMX - Free Report) , the undisputed leader of the Mexican telecom market, recently purchased 60 MHz of wireless spectrum in the 2.5 GHz band from Grupo MVS. The acquisition of spectrum will enhance the company’s high-speed data service.
Over the last couple of years, America Movil has been systematically enriching its spectrum portfolio. In Jun 2016, the IFT granted concessions for the 1710-1780 MHz/2110-2180 MHz AWS frequency bands to America Movil and AT&T Inc. (T - Free Report) . On Feb 15, 2016, the IFT opened an auction for 80 MHz of wireless spectrum across various Advanced Wireless Services (AWS) bands. America Movil and AT&T emerged as the two winners of the spectrum auction.
In 2014, the government of Mexico introduced some major reforms within its telecom sector. Per the IFT norms, the maximum hold of a company in any specific market has been restricted to 50%. However, about 66% and 70% of telecom space is controlled by America Movil’s wireline and wireless divisions, respectively. This has induced IFT to identify the company as a dominant market player and imposed stringent regulations on it.
Another incumbent telecom operator -- Telefonica S.A. (TEF - Free Report) -- holds nearly 20% market share. In 2015, U.S. telecom behemoth AT&T entered the Mexican telecom industry after acquiring Grupo Iusacell and Nextel de Mexico. In addition, Mexican cable MSO (multi service operator) Grupo Televisa S.A. (TV - Free Report) , has also received a go-ahead from the IFT to enter the wireless space. However, the company is yet to take any decision in this regard.
Mexico is the largest economy in the Latin American region, with a growing middle class population that is eager to spend more on high-speed wireless networks for optimal use of smartphones and tablets. Also the wireless penetration rate is relatively lower in the country compared with that in the U.S. We, therefore, expect increased competition in this market.
America Movil currently has a Zacks Rank #5 (Strong Buy) while AT&T, Telefonica and Grupo Televisa carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
See This Ticker Free >>