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27 November 2019

AT&T and Telefónica to share Mexican networks to challenge América Móvil

Network sharing is becoming an increasing popular option to reduce costs for operators which are facing another round of hefty capex and opex bills to support 5G.

Mexico is a trailblazer in this area because of its government-driven wholesale LTE network, which is being built by neutral host integrator Altan Redes in the 700 MHz band, too be shared by all the MNOs. This is designed to reduce the cost of covering rural areas, in particular, with 4G, while the operators can focus their investment in their own, midband spectrum on more profitable urban areas.

More sharing is on the cards in Mexico, with a deal between AT&T and Telefónica. Between them, these two operators have fewer than half the subscribers in Mexico of the market leader, América Móvil – despite rules, drawn up in recent years by the government, to reduce Móvil’s dominance.

The network infrastructure cooperation is designed to help the two challengers to compete more effectively with the leader, by reducing their costs and time to market.

A report by Reuters suggests that Telefónica will use AT&T’s last mile infrastructure to connect customers to its fiber networks and provide mobile backhaul. The deal will deliver cost saving synergies of over $250m per year, after the initial three-year transition period.

Telefónica Mexico’s CEO Camilo Aya told journalists that his company was free to sign similar deals with other operators in the country. “You need a lot of scale to compete in this business,” he said.

AT&T’s VP for external affairs for Mexico, Monica Aspe, told Reuters: “What this agreement does is strengthen the ability to compete.”

América Móvil has over 73m subscribers in Mexico, while Telefónica Movistar and AT&T Mexico have 25.8m and 12.5m respectively.