Mexico. Investment in telecommunications infrastructure is the sine qua non for sectoral development and growth and, with it, key to the efficient provision of its services. Even more important for Mexico, given the structural condition of infrastructure deficit that we have.
Here, the crucial component for sector capitalization is the investment allocated by companies providing telecommunications, fixed mobile and cable connectivity services.
According to the latest statistics published by the Federal Institute of Telecommunications (IFT), private investment in telecommunications infrastructure in Mexico amounted to $57.8 billion pesos (mmp.) in 2018, an amount equivalent to 11.7% of the revenues generated this year by these companies.
However, there is no uniform dynamic or contribution between segments.
Investment by Market Segments. Although technological convergence makes it difficult to disaggregate statistics by category of application of investments, a proclivity of investment characteristic by companies is identifiable by reason of the main service provided.
Thus, mobile operators contribute only 19.1% of sectoral investments, despite obtaining 57.6% of total revenues.
In stark contrast, the efforts of the companies that provide, mainly the pay television service and cable internet, stand out, who despite the fact that they enter only 18.3% of the total, contribute practically a third (31.2%) of the total resources dedicated to the sectoral capitalization.
Investment Dynamics by Segment. In the last five years recorded by the IFT statistics, this between 2013 and 2018, the mobile segment has registered a significant reduction in its investment rate.
In 2013, infrastructure additions reached $33.6 mmp, but in 2018, they were only $11.0 mmp., representing a cumulative reduction of 67.1%. This is explained, for the most part, by the manifest containment of resources of the preponderant operator (Telcel), despite the fact that it enters more than 70% of the total generated in this segment.
Meanwhile, cable players tv and internet providers went from investing $ 11.2 mmp. in 2013 at $18.0 mmp. in 2018, that is, a growth of 60.7% in the period. This is attributable to its strategy of expanding the coverage of the so-called Past-Houses and Past-Businesses, as well as the marked efforts to expand and modernize its cable networks for the convergent provision of services, with increasing transmission capacities and quality.
Thus, the capital additions of Pay-TV and Internet operators who have dedicated efforts not only to increasing their data transmission capacities, but also to bringing services closer to the population, are remarkable.
It is for this reason that the cable segment registers a superior market dynamism. In other words, it is a set of operators with an upward revenue dynamic, based on their accentuated investment efforts.
Thus, the regulatory policy lesson derived from these figures is that, by aligning the IFT incentives towards the operational condition of effective competition, it will be implicitly stimulating the greater capitalization of the sector that comes mostly from competing agents, not from the preponderant. Without a doubt, the best route to close our telecommunications infrastructure deficit.
Text written by Ernesto Piedras of The Competitive Intelligence Unit.
