BMI's Executive Summary

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Regulator Cofetel has taken some important steps towards liberalising Mexico's telecoms markets, with the decision to approve all requests for reselling any telecoms service providing that the service meets the requirements of the country's telecoms law and the approval of new interconnection guidelines in an effort to speed up liberalisation of the nascent triple play market. The first MVNO licence has been awarded to fixed-line operator Maxcom, which is also reported to be planning to roll out IPTV services in all of its operations by YE08, as well as an IPO of up to US$175mn in American depositary shares (ADSs). The new interconnection guidelines will hinder any attempts to delay competition by setting a minimum of 40 days for agreements to be reached between operators. Unsurprisingly, dominant fixedline and broadband operator Telmex has complained about the new rules, but the regulator seems determined to push through measures to open up the market.

Regulations permitting cable TV operators to offer telephony services were approved in July and Telmex has already signed interconnection agreements with nine operators. Broadcasting group Grupo Televisa, which already dominates the pay-TV market and has made several pay TV acquisitions so far in 2007, has now agreed to acquire long-distance operator Bestel as it prepares to battle it out with Telmex. While Mexico's fixed-line market is stagnating despite growth from alternative operators, the broadband market is growing more quickly than anticipated thanks to market leader Telmex. The operator continues to post above average growth for the sector despite already accounting for over 70% of the market. In light of this growth and the good developments in the triple play market, we have raised forecasts and now expect the market to grow by over 1mn net additions or around 54% in 2007, which will increase penetration from 2.4% to 3.6%. Good double-digit growth should continue over the forecast period, and we currently anticipate penetration to exceed 9% in 2011.

The mobile market is also growing slightly more quickly than anticipated, and more quickly than in 2006, with a concerted effort by Movistar, although Telcel continues to post the greater number of net additions. Even though Telcel was the only operator to record falling market share in Q207, it still accounted for a massive 74.3% of the market. Movistar's growth is coming predominantly from the prepaid sector, although it is managing to record rising ARPU and MOU levels. We now anticipate it to continue this focus, at least until the end of 2007, even though it has one of the highest (if not the highest) proportions of prepaid subscribers in the region. We now expect the mobile market to grow by 20-21% in 2007, which will raise penetration to just over 63%, and that the 100mn subscriber mark will be reached in 2011 with 90% penetration. If more operators follow Maxcom's lead in applying for MVNO licences and aggressively attack the prepaid market, growth will be swifter and forecasts will again need to be raised upwards.

Contents

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Chapter 1 - Executive Summary

Chapter 2 - Industry Forecast Scenario

Fixed-Line

Table: Mexico Telecoms Sector – Fixed-line – Historical Data & Forecasts

Internet

Table: Mexico Telecoms Sector – Internet – Historical Data & Forecasts

Mobile

Table: Mexico Telecoms Sector – Mobiles – Historical Data & Forecasts

Chapter 3 - Macroeconomic Climate

Solid Platform For Sustainable Growth

What's Next?

Rise Of The Domestic Consumer

Table: Economic Activity Indicators

Chapter 4 - Country Snapshot: Mexico Demographic Data

Section 1: Population:

Table: Demographic Indicators (2005)

Table: Rural/Urban Breakdown

Section 2: Education & Healthcare

Table: Education

Table: Healthcare: Vital Statistics

Table: Healthcare: Expenditure

Section 3: Labour Market And Spending Power

Table: Employment Indicators

Table: Consumption and Stratification

Table: Wages per year

Chapter 5 - Business Environment

Latin America

Mexico

Mexico Telecoms Industry SWOT Analysis

Chapter 6 - Competitive Landscape

Market Overview

Competitor Analysis

Table: Key Players: Mexico Telecoms Sector

Table: Key Players: Mexico Telecoms Operators Financial Indicators

Key Players

Fixed-Line

Table: Regional Fixed-Line Penetration Overview

Internet

Table: Regional Internet Penetration Overview

Table: Regional Broadband Penetration Overview

Mobile

Table: Regional Mobile Penetration Overview

Market Data Analysis

Fixed-Line

Table: Mexico Local Access Market, Q206

Internet

Mobile

Table: Mexico Wireless Market, Net Additions, 2005-6

Table: Mexico Mobile Market, Q206

Table: Mexico Mobile ARPU, 2005-6

Industry Developments

Chapter 7 - Company Profiles

Selected Profiles

Telmex

Axtel

Avantel

Telcel

Telefónica Móviles México (Movistar)

Iusacell

Ericsson

Nortel Networks

Motorola

Chapter 8 - BMI Forecast Modelling

How we generate our industry forecasts

Telecommunications Industry

Sources

Chapter 9 - Appendix: Regional Demographic Data

Wages (ave per annum), US$

Population

Household Spending Per Capita, US$

Private Consumption Per Capita, US$ PPP

Market Size, GDP, US$bn

Competitive Landscape for Latin America Telecommunications Reports: Sample of Companies Ranked

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Commentary on key operators highlighting ownership structures, latest available revenue figures, market share analysis and ARPU counts. BMI forecasts for all headline macroeconomic indicators, including real GDP growth, inflation, fiscal balance, trade balance, current account and external debt. Company SWOTS Covering all leading telecommunications operators and manufacturers operating in each market, including competitive intelligence on geographic presence and competitive positioning against local companies; local market share; leading products, services and technologies; foreign direct investments, projects, merger and acquisition strategies.

Network of Latin American Telecommunications Sources

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BMI's Latin American Telecommunications Reports are based on an extensive network of multilateral organisations, government departments, telecommunications industry associations, chambers of commerce and company reports. Information sources include: