The Mexican regulator has admitted that the country’s imminent mobile spectrum auctions are unlikely to produce a new market entrant to challenge America Movil’s local dominance. Gonzalo Martinez Pous, a commissioner at Mexico’s Federal Telecommunications Commission (FTC), told Bloomberg that the auctions had attracted interest from major international operators such as China Mobile, India’s Reliance Communications and T-Mobile-owner Deutsche Telekom. However, he said that all three had decided against bidding as they had concerns about regulators’ ability to foster competition in a market where the market leader – America Movil’s Telcel – controls around 72 percent of the local mobile market. The government had expected to generate about US$5.8 billion from auctions, according to data from the FTC. But without an additional entrant, the figure would fall to about US$4.3 billion because a block of airwaves will go unsold.
A fifth competitor in Mexico (joining Telcel, Telefonica, Grupo Iusacell and NII Holdings) would lower prices, cutting into sales and profits at Telcel, said Christopher King, an analyst at Stifel Nicolaus & Co. “[The lack of a new entrant] has to be viewed as a win for Telcel,” said King. “It’s a disappointment for the government.” However, the report notes that the auctions will be useful in establishing a competitor to Telcel in the country’s 3G market. Telcel is the only operator in the country to have rolled out 3G services to date but second-placed Telefonica is among those expected to acquire 3G spectrum in this month’s auctions. The auctions are due to start on 25 May with the winners announced 30 days later.
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