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Mexican telecoms: big moves

Tuesday, October 7, 2014

Mexico's telecom sector is becoming increasingly attractive for foreign investors, after the government approved a structural reform to allow more competition.

In the last week of September, the country received its first bid from a consortium to build a $10 billion state-owned mobile network.

Helping the consortium design the plan were Alcatel-Lucent and Ericsson.

If successful, the new state-owned network would help the country's number two and three mobile phone operators, Spain's Telefónica and Mexico's Iusacell (only in Spanish) respectively, to compete against Carlos Slim's América Móvil.

The new company would help those firms by giving them better coverage, without them having to spend extra on building the network.

The same project is also expected to attract more competitors in the mobile virtual network operator sector.

Mexico has already welcomed one virtual operator, Britain's Virgin Mobile, while Lycamobile is expected to enter later this year.

Although Carlos Slim had first opposed to breaking up his company América Móvil, a step he had to take to ensure the company was not deemed dominant by the new sector regulator IFT (only in Spanish), América Móvil's shares have soared 24 percent in the third quarter this year.

The figure is the highest growth rate for the company in the past five years.

The company's board agreed to sell assets worth some $17 billion in order to reduce its market share.

AT&T is the most likely firm to snap up América Móvil's assets.

The company sold its Mexican unit's shares to Slim for $5.5 billion last June, as well as satellite TV company DirecTV.

Other companies with enough capital to purchase América Móvil's shares include Deutsche Telekom, Verizon, Orange, T-Mobile and China Mobile.

The second-largest mobile operator, Iusacell, for its part said it is looking for a global partner to help boost its services, after Televisa sold its 50 percent share in the company to Grupo Salinas for $717 million.