Mexico. The recovery in the dynamism of the national productive apparatus has caused the telecommunications sector to register its usual procyclical trajectory, growing at a similar level (16.2%) to that of GDP (19.6%) during the second quarter of the year (Q2-2021).
The growing use and consumption of connectivity devices and services during the pandemic, the lower restrictions on mobility, as well as the improvement in the economic outlook for the country have propelled the recovery of sectoral dynamism that has even cushioned the fall of the national economy.
In 2020 alone, it was projected at the beginning of the health crisis that the economy would contract -36%, a level that was only -8.3%, as a result of the damping effect caused by the growing adoption and use of connectivity in production processes. At the end of the first half of 2021, a full sectoral recovery is in sight, even surpassing levels prior to the pandemic, attributable to this circumstance.
Mobile Market in Recovery
In the quarter, this market registered a marked dynamism by growing 7 percentage points (pp) more than the economy as a whole, reaching a coefficient of 26.6%, more than surpassing the fall of 18.2% a year ago and leaving behind the red numbers of the previous quarters, to contribute 5.8 pesos out of every 10 that enter the sector.
Despite the significant decrease in the purchasing power of Mexicans during the last year as a result of the economic crisis, they have chosen to acquire more and better equipment (annual growth 69.5%), as well as to hire and make use of more mobile connectivity services (+12.8%).
Fixed Telecoms in Negative Streak
Today more than ever, the essentiality of having connectivity in homes and companies in the country is manifest, such that access to fixed broadband registered an annual growth of 10.9% during Q2-2021. However, the fixed telecommunications segment continues in the red, falling 0.9% in the period.
The growing migration of voice traffic to internet platforms, as well as the adjustment of rates of this service have caused this long negative streak that has resulted in an increasingly smaller contribution of the segment to the total revenues of the sector, to reach 18.1% during the quarter.
Pay-TV and Convergent Services on the Rise
This market registers a usual positive dynamism, reaching a growth of 8.9% in Q2-2021 and is positioned as the second segment with the highest contributions to sectoral revenues with a proportion of 23.8% of the total.
The growing preference for the hiring of fixed telephony, internet, pay TV, and even quadruple play packages by adding cellular service, have not only boosted the hiring of all these, but also the income of operators in this segment.
Projections for 2021
The acceleration in the trajectory of the economy as a whole and the growing adoption and use of telecommunications services for households, companies and individuals in Mexico outlines a trajectory of sectoral recovery to levels higher than those registered before the pandemic.
In numbers, the expectation is that the revenues of telecommunications companies in Mexico will grow 7.4% in 2021, but could be up to 8.8% higher, levels that exceed the projection of 6.1% annual GDP growth of economic specialists captured by Banco de México.
One of the factors that put at risk the rebound in the dynamics of the sector is the marked and already long-standing reconcentration of revenues in favor of the preponderant, América Móvil (Telmex-Telcel). The deregulation of this player and its proven monopolistic practices threaten the efficient development of the sector, especially of competing operators.
Text published by The Competitive Intelligence Unit, CIU.
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