Mexico. 2017 is over and a dynamic year for telecommunications arrives. The infrastructure deployments that will be made in the country, starting with the next radio spectrum tenders and the effective materialization of network investment projects (backbone and shared network) will shape the dynamics of telecommunications for recent years.
The macroeconomic environment, political circumstances and sporting events, as well as the evolution in regulatory policy, have also proven to impact the markets that make up this sector.
However, to understand the degree of influence of these factors, it is worth making a cash cut on the panorama of the telecommunications sector in Mexico at the end of 2017, and from this to carry out a prospective exercise on the scenario that will take place in 2018.
In recent years, the entry of new companies into the market, strategic alliances between competitors, the establishment and modification of specific rules for the dominant operator in the market, among others, have generated a new competitive dynamic. In turn, all this has detonated consequent effects on supply conditions, consumption habits, reconfiguration of markets and the generation of new business opportunities.
How does this translate into quantifiable dimensions, for example, in terms of revenue?
According to estimates by The Competitive Intelligence Unit, at the end of 2017, the telecommunications sector as a whole generated $473,672 million pesos, equivalent to an annual growth of 4.3%, higher than the 3.5% achieved in 2016. This boost in the projected figure is based on the good performance recorded during the third quarter of the year and the good prospects at the end of the year.
Moreover, a more optimistic result is forecast for 2018, with a growth coefficient of more than 5.0%, attributable to the greater dynamism of the Pay-TV market, the stabilization in the mobile ARPU and the incessant and growing consumption of broadband services, both fixed and mobile.
In its composition by segments, that of fixed telecommunications registered a lower growth, but it is expected to continue on a positive path with average ratios of 1.5% for 2017 and 2018, mainly explained by the increase in the consumption of fixed broadband at higher speeds and by the marked preference for the packaging of fixed telephony with internet and Pay-TV services.
As far as the Pay-TV market is concerned, it is expected to show a very favorable evolution during 2018 despite the slowdown registered during 2017. For 2018, growth of 15% is expected in the neighbourhood, guided both by the income derived from political campaigns, as well as by the transmission of the World Cup matches.
For its part, the mobile segment is expected to continue on a path of stabilization and improvement in the market value, guided by the greater number of postpaid users, a reduction in the validity of the prepaid balance and the greater consumption of mobile services, especially mobile broadband (BAM). To achieve an annual growth close to 4% during 2018.
After this quantitative count of the sector, a favorable forecast for 2018 is expected as a result of the benefits generated by the new competitive ecosystem, the injection of greater infrastructure resources, as well as the increase in the supply and consumption of services offered. The upward ramp of growth of the sector is expected to continue, derived from the greater coverage of services, the deployment of new generation networks, the deepening in the demand and consumption of services, among other factors.
Text written by Ernesto Piedras of The Competitive Intelligence Unit.
