The Mexican government has slashed the budget for its planned shared network project by almost a third to US$7bn from an initial US$10bn, according to deputy minister for transport and communications, Monica Aspe. In an interview with Reuters, Aspe said…
The Mexican government has slashed the budget for its planned shared network project by almost a third to US$7bn from an initial US$10bn, according to deputy minister for transport and communications, Monica Aspe.
In an interview with Reuters, Aspe said that the ministry tried to cut costs by reducing the estimated number of base stations required for the project from 20,000 to 12,000.
“Mexico’s telecommunications sector is different today to two years ago, the tender for the shared network has to recognise that,” she was quoted saying.
The Secretaria de Comunicaciones y Transportes (SCT), which extended the deadline to submit expressions of interest in the project by a month to 22 May, is due to provide more details on the project’s business model in the coming days.
More than forty companies reportedly submitted expressions of interest in the project. A tender is scheduled for H2 2015.
In January, China Telecom was rumoured to be looking to bid for the project in partnership with local operators, having secured several billion dollars of financing from China Development Bank and other Chinese state-owned banks.
The network, which is based on a private-public partnership (PPA) scheme, will serve established wireless carriers and MVNOs, as well as fixed-line players looking to expand their capacity to offer mobile packages, Aspe told the newswire.
Both the STC and Mexican telecoms regulator, the IFT, were not immediately available for further comment.
The government will devote 90 MHz of spectrum in the 700 MHz band to a nationwide 4G/LTE wireless broadband network aimed at improving nationwide mobile coverage and penetration, particularly among under-served communities.
Critics of the project have argued that a state-controlled infrastructure network cannot be competitive and guarantee a good service for its users, warning that the initiative could dissuade operators from investing in their own networks.
In an interview with Telecom Finance in March, IFT commissioner Fernando Borjon rebutted criticism, pointing out that the government’s involvement in the plan will be limited to providing infrastructure, including spectrum released by the transition to digital terrestrial television, the fibre optic infrastructure of the Federal Electricity Commission (CFE) and other state-owned assets, as well as rights-of-way to access the spectrum.
The initiatives are part of the constitutional reforms implemented last year under the presidency of Enrique Pena Nieto, aimed at fuelling competition and attracting foreign investments into the country, loosening America Movil‘s (AMX) grip on the local telecoms market.
The Carlos Slim-owned telco has recently agreed to share network infrastructure to comply with the new regulations.
However, during a Q1 earnings call last month, AMX CEO Daniel Hajj said the company does not intend to sell frequencies or infrastructure as it had originally planned as new entrants such as AT&T, which recently bought Iusacell and agreed to acquire Nextel, are challenging its market dominance.
The company is still assessing ways to reduce its market share, having approved the spin-off of its tower unit, Telesites, which will comprise 10,800 towers and other passive infrastructure used by its wireless subsidiary Telcel.
