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Mexico Telecom Sector Boom Likely to Stay: Here's Why
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In 2014, the government of Mexico initiated major reforms within its telecommunications sector. Mexico’s telecom regulatory authority, the Federal Telecommunications Institute (IFT), had taken several steps to instil competition in the highly monopolistic industry. Those reform initiatives have started bearing the desired results.
According to a recent report by The Competitive Intelligence Unit (CIU), the Mexican telecommunications sector is set to end 2016 with overall revenues of MXN 445.3 billion, up 2.1% year-over-year. Despite this favourable turn of events, the dwindling mobile telephony revenue which is likely to drop 2.4% year-over-year to MXN 243.3 billion remains a major cause of concern. However, the decline in mobile telephony revenues is more than offset by a significant surge in pay-TV revenues. Revenues from this segment are likely to be pegged at MXN 78.4 billion, up 21% year over year. Fixed telephony revenues are set to rise 1.3% to MXN 123.6 billion.
Widespread implementation of flat rate plans have resulted in a whopping 28.5% decline in mobile telephony prices year over year. Nevertheless, CIU is optimistic about future growth prospect of this industry. According to the research firm, Mexico’s overall telecom revenues are forecasted to grow around 4% to MXN 463.3 billion in 2017. Mobile telephony, fixed telephony and pay-TV segments are anticipated to grow by 1.3%, 1.1% and 17.3%, respectively, in 2017.
At present, there are three nationwide telecom operators in Mexico. Mexican telecom behemoth America Movil SAB (AMX - Free Report) and Spanish telecom giant Telefonica SA (TEF - Free Report) are the two incumbents. Last year, the U.S. telecom behemoth AT&T Inc. (T - Free Report) entered the fray with the acquisition of Grupo Iusacell and Nextel de Mexico. All the three stocks mentioned above currently carries a Zacks Rank #3 (Hold). You can seethe complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Furthermore, AT&T acquired U.S. satellite TV giant DIRECTV, which had a strong Latin American presence including Mexico. Moreover, the IFT has permitted the Mexican TV broadcasting giant Grupo Televisa SA (TV - Free Report) to enter the country’s telecom market. However, the company is yet to take any decision in this regard.
In Mar 2016, Mexico established the Telecommunications Investment Promotion Agency through a presidential decree. The agency is responsible for the installation of the government’s proposed 4G LTE shared network and provision of telecommunications services. The federal government will provide the resources to the agency that will be managed by a board of directors, headed by the Minister of Communications and Transport while the IFT will regulate it.
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Mexico Telecom Sector Boom Likely to Stay: Here's Why
In 2014, the government of Mexico initiated major reforms within its telecommunications sector. Mexico’s telecom regulatory authority, the Federal Telecommunications Institute (IFT), had taken several steps to instil competition in the highly monopolistic industry. Those reform initiatives have started bearing the desired results.
According to a recent report by The Competitive Intelligence Unit (CIU), the Mexican telecommunications sector is set to end 2016 with overall revenues of MXN 445.3 billion, up 2.1% year-over-year. Despite this favourable turn of events, the dwindling mobile telephony revenue which is likely to drop 2.4% year-over-year to MXN 243.3 billion remains a major cause of concern. However, the decline in mobile telephony revenues is more than offset by a significant surge in pay-TV revenues. Revenues from this segment are likely to be pegged at MXN 78.4 billion, up 21% year over year. Fixed telephony revenues are set to rise 1.3% to MXN 123.6 billion.
Widespread implementation of flat rate plans have resulted in a whopping 28.5% decline in mobile telephony prices year over year. Nevertheless, CIU is optimistic about future growth prospect of this industry. According to the research firm, Mexico’s overall telecom revenues are forecasted to grow around 4% to MXN 463.3 billion in 2017. Mobile telephony, fixed telephony and pay-TV segments are anticipated to grow by 1.3%, 1.1% and 17.3%, respectively, in 2017.
At present, there are three nationwide telecom operators in Mexico. Mexican telecom behemoth America Movil SAB (AMX - Free Report) and Spanish telecom giant Telefonica SA (TEF - Free Report) are the two incumbents. Last year, the U.S. telecom behemoth AT&T Inc. (T - Free Report) entered the fray with the acquisition of Grupo Iusacell and Nextel de Mexico. All the three stocks mentioned above currently carries a Zacks Rank #3 (Hold). You can seethe complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Furthermore, AT&T acquired U.S. satellite TV giant DIRECTV, which had a strong Latin American presence including Mexico. Moreover, the IFT has permitted the Mexican TV broadcasting giant Grupo Televisa SA (TV - Free Report) to enter the country’s telecom market. However, the company is yet to take any decision in this regard.
In Mar 2016, Mexico established the Telecommunications Investment Promotion Agency through a presidential decree. The agency is responsible for the installation of the government’s proposed 4G LTE shared network and provision of telecommunications services. The federal government will provide the resources to the agency that will be managed by a board of directors, headed by the Minister of Communications and Transport while the IFT will regulate it.
Where Do Zacks' Investment Ideas Come From?
You are welcome to download the full, up-to-the-minute list of 220 Zacks Rank #1 "Strong Buy" stocks free of charge. There is no better place to start your own stock search. Plus you can access the full list of must-avoid Zacks Rank #5 "Strong Sells" and other private research. See the stocks free >>