Mexico. The year 2024 is seen as a pivotal year for the development of telecommunications in Mexico, especially in direct proportion to the achievement related to the challenges and pending issues it faces.
In its recent evolution, there is a renewed impulse of mobility inserted in a process of technological transition and intensification in the massive use of mobile data that, together with the marked relevance of connectivity in the country's homes and businesses, have driven the sector's growth in terms of income.
Thus, in a context of higher economic growth, a positive evolution of the sector of 5.3% is forecast in all of 2023, 0.3 percentage points higher than in 2022, measured by the accumulated revenue generated by telecommunications companies.
By 2024, the projection is 4.8% as a result of various market and regulatory factors detailed below.
Market: Driving Factors. From a market perspective, the upward trajectory in the consumption of data, applications and content, but above all the expansion in the availability and improvement in fixed and mobile connectivity capabilities, supported by the growing deployment and development of next-generation networks and innovation in the offer of services, They will overcome limited macroeconomic dynamism and boost sectoral growth in 2024.
At the same time, the recovery in the sale of mid-range and high-end equipment through telecommunications operators will be a platform for the dynamism of the mobile segment and consequently for telecommunications revenues as a whole.
Regulation: Pending Issues. From a regulatory perspective, an additional factor that can act as a catalyst for the sector or an obstacle to this dynamism is regulatory decisions around persistent structural immovability and excessive market concentration. The shift towards effective competition and a level playing field would make it possible to balance market conditions among operators and, consequently, effectively navigate the adversities that are predicted for the sector's development.
In 2023, several subjects remained pending
In the first place, the third determination of adjustments or new measures of preponderance in telecommunications did not arrive, despite a public consultation having been held at the beginning of last year. This marked the third anniversary of a biennial review in December, which, despite its usual delay, is expected to be a priority for the Federal Telecommunications Institute (IFT) at the beginning of the year.
Another of the pending regulations that will have to be taken up again this year is the issuance of the bases for the bidding of optimal frequencies for 5G that have been postponed since the pandemic and that have delayed the deployment plans of this technological generation throughout the country. This will be an opportunity for the IFT to include criteria other than the economic one to promote the development of these networks, distancing itself from the collection objectives pursued by the Ministry of Finance and Public Credit (SHCP) and the Chamber of Deputies for the use of the radio spectrum.
Undoubtedly, a transcendental year for the future of telecommunications in Mexico is foreseen, not only to detonate its advance, but also to abandon the scenario of marked competitive imbalances and lack of incentives for investment in infrastructure.
The key to guaranteeing all this lies in achieving the pending issues for the regulator in 2024.
Text written by Ernesto Piedras of The Competitive Intelligence Unit, The CIU.
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