Mexico has lost 738 million dollars since 2020 due to the telephone companies’ renunciation of their spectrum concessions.
This January 1 marked five years since a telecommunications company returned all its radioelectric bands to the Mexican State for the first time, because the cost of exploiting them put its financial operation at greater risk than the competitive dynamics of the mobile market itself.
This was a spectrum that the telephone companies had bought in previous tenders, but which became more expensive by double digits due to the annual amounts of rights that the Ministry of Finance and the Chamber of Deputies set each year in the Federal Rights Law.
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Mexico today has the smallest amount of radioelectric spectrum in exploitation for mass telephone and Internet services, whether mobile or fixed wireless. Illustration: Nayelly Tenorio.
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In 2020, the compensation for frequencies, the so-called glove, was already 35% higher in price than the international average at the time of the tender, and the annual payment of rights made some bands even more expensive. For example, 92% for the most used band for mobile Internet in Mexico, the 2.5 GHz band; and around 62% more expensive for a band like the 850 MHz band, whose technical nature is more noble for bringing coverage to rural areas.
These two radio bands were among the first that companies returned to the State. On January 1, 2020, the Movistar company began the full and gradual return of its frequencies, which culminated in 2022.
A few weeks earlier, at the end of 2019, the operator AT&T partially renounced a regional concession, although it would not be the only one, since in 2022 and 2023 it also renounced other regional concessions. And in 2024, the competitor Telcel also announced that the deployment of cellular networks with 5G technology would be impacted by the expensive spectrum.
In this way, in five years the Mexican State has seen the return of spectrum with different technical nature and coverage scope, which has meant 15,390 million pesos, 738 million dollars, which did not reach the Treasury of the Federation because Mexico has the most expensive criteria in America to grant the spectrum.
Companies have so far given up about 120 megahertz of frequencies, including all the returned bands and with different technical capabilities. That is enough spectrum for two new companies with national reach to build their own cellular networks in Mexico.
More specifically, the company Telefónica Movistar gave up its concessions in the 1.9 GHz and 2.5 GHz bands, more suitable for data transport capacity and penetration in buildings; and also returned spectrum in the 800 MHz, more suitable for coverage expansion.
AT&T returned spectrum in the 800 MHz and 850 MHz bands, as well as its concessions in the 1.7 GHz and 2.1 GHz spectrums, more suitable for 4G services.
The refunds were national and regional for Movistar and regional for AT&T, although the affected areas included the populous Guadalajara and Mexico City, and the industrial areas of Tijuana, León and Mexicali, as well as ports such as Guaymas and San Carlos.
According to the band, the scope of coverage of this and the period in which each refund of the spectrum took place, the loss of revenue for the State was 4,569 million pesos per year for the case of Telefónica Movistar and about 1,683 million pesos per year for the resignations of AT&T.
All the returns of radio spectrum occurred during the six-year term of President Andrés Manuel López Obrador, a government in which the State provided an injection of 166 million dollars to refloat the mixed capital company Altán Redes, whose telecommunications network is the main input for Walmart’s BAIT, and to which the same Ministry of Finance also gave a grace period in 2024 to pay its annual payments for using spectrum until the first half of 2025.
López Obrador’s six-year term ended with 3.3% less spectrum availability compared to the 584 Megahertz available during Enrique Peña Nieto’s government, when 5G technology was still a promise.
The returns of spectrum to the State due to its cost not only mean less revenue for the public treasury.
This means less availability of frequencies used in the market to bring Internet to Mexicans and affects the dynamics of the Mexican mobile market, as there are only two completely private operators in the country, AT&T and Telcel, with their own spectrum and only one, Telcel, with sufficient financial capacity to pay for the frequencies.
Source: infobae
