Government Transfers Altán Redes to CFE Telecomunicaciones

The government has transferred control of Altán Redes to the Federal Electricity Commission (CFE) through its subsidiary CFE Telecomunicaciones e Internet para Todos (CFE TEIT). This measure aims to secure the “Internet for All '' project but entails that the State will assume a debt of MX$29,811 million (US$1.6 billion). This could potentially create market distortions similar to those seen with Pemex. 

In June 2022, the Mexican government formalized the acquisition of Altán Redes with the goal of “bringing the internet to the most remote communities in the country”. President Andrés Manuel López Obrador has strongly supported the government's acquisition of Altán Redes. “It is an association and it is also a network that already covers 70% of the country,” said López Obrador during his morning conference on Jun. 13, 2022.

López Obrador justified the government's intervention by highlighting that Altán Redes was facing financial difficulties and had outstanding debts with Nacional Financiera (NAFIN), jeopardizing the goal of nationwide connectivity. 

According to various experts, this financial intervention is fraught with challenges, as state control of Altán Redes might replicate the difficulties observed with Pemex’s US$105 billion debt burden and subsequent financial issues. 

“It has become evident that, under this Administration, there will be no significant bailout for Pemex,” said Roger Horn, senior strategist, SMBC Nikko Securities America, in an interview with El Financiero. 

Since acquiring Altán Redes, the Mexican government has provided financial support on two occasions: first, through the national development bank with an investment of US$161 million to sustain the company's operations; and later, in September 2023, Bancomext and NAFIN provided additional financing of up to US$100 million.

Salomón Padilla, vice-president, Association of Independent Telecommunications (ATIM), has warned that the rescue of Altán Redes could result in it becoming a “new Pemex”. Padilla pointed out that the government has intervened three times to rescue Altán, and there remains insufficient public information on connectivity progress or the company’s current financial situation. 

The impact on the telecommunications market is another concern, according to Expansión. Since government intervention, Altán Redes has enhanced network capabilities for CFE TEIT and Mobile Virtual Network Operators (MVNOs) such as Bait. This has led to the offering of affordable plans, putting pressure on major operators like Telcel, AT&T, and Telefónica, who are struggling to match competitive rates. América Móvil has filed lawsuits against Altán for alleged anti-competitive practices.

Altán Redes is reportedly on a positive trajectory that could lead it to break even in 2024, according to information from Consumotic. This improvement is attributed to more favorable results than expected in 2023, including increased user numbers and enhanced service quality.

“The company is operating under normal conditions; it is not undergoing commercial bankruptcy processes, as it was previously, so I do not anticipate any adverse effects for users,” commented Carlos Lerma, director, Altán Redes. 

In March of this year, Lerma stated to Expansión that the company has attracted 11 million users over the past year, nearly double the number reported in 2022. However, there has been no access to official documentation to verify this information.