Telecommunications Sector Sees a Boom

Mexico’s telecommunication sector is witnessing increasing diversification as nontraditional virtual mobile operators (MVNOs) enter and successfully compete with Telcel, AT&T and Movistar, thereby increasing market competition to the benefit of the consumer.

These new MVNOs have grown quickly – roughly 65.4 percent last year – indicating that they have found a way to position themselves in the mind of their consumers ahead of established companies.

Rolando Alamilla, Consultant at Competitive Intelligence Unit (CIU), explained that these gains come from MVNOs’ ability to consolidate and attack the market from an angle that traditional companies cannot compete with. "MVNOs are the ones that are growing to a greater extent, in this second wave they understood very well that they had to compete with the traditional operator in a way that was not only through price."

Understanding that they are unable to compete with the prices of traditional companies, MVNOs have relied on their ability to offer promotions, discounts and value-added services through other lines of business. For example, Walmart is already the second biggest virtual mobile operator.

In the consulting firm’s second quarter analysis, On a Path to Full Recovery, shows that MVNO companies provided 4.25 million lines in the country, registering 65.4 percent growth from last year, effectively representing 3.3 percent of the 127 million service lines in Mexico.

As these MVNO companies have made gains, traditional companies have experience minimal market power loss or remained stagnant. Last year, Telcel went from holding 62 percent to 61.6 percent of the market, Movistar went from 21.1 percent to 21.01 percent and AT&T was the only one to not loose consumers but it only grew by 0.1 percent.

As indicated by growing market power, these new companies have also increased their revenue streams growing a whopping 161.3 percent in the last 12 months, surpassing the MX$336 million made during the second trimester of 2020 to MX$877.8 million.

Of these new players, the companies with the biggest market share is Dish’s Freedom Pop with 20.3 percent, Walmart’s Bait comes in second with 17.3 percent and in third place Elektra’s OUI with 16.3 percent, according to data from CIU.