Iusacell and Telefónica's Mexican network sharing agreement to challenge Telcel

14 June 2012 |

Mexican mobile operators Iusacell and Telefónica’s Movistar have signed a network sharing agreement to challenge the dominance of Carlos Slim’s Telcel, which has just over 70% market share in the country.

Under the terms of the agreement the two operators will share their mobile towers and fibre networks but still manage spectrum and services independently.

Both operators claim that the alliance will offer the largest and fastest network in the country and break the technological deadlock allowing the roll-out of LTE and Wifi access points.

The network sharing agreement includes the combined deployment of new infrastructure and the expansion of 36,000km of fibre-optic cable. It is claimed that the alliance will benefit 27 million users helping to bridge the digital divide between urban and rural areas.

John Abellán, CEO of Movistar Mexico said in a statement that the country urgently needed to reduce the digital divide. He claimed Mexico was one of the least advanced nations in Latin America in terms of mobile technology and market penetration and that the network sharing agreement would help change this.

Telefónica said that its investments in Mexico will equal approximately $500,000 in 2012 and it will grow its network by 25%.

The network sharing agreement is the second announced in a week by Telefónica, which has been seeking to reduce its $71.8 billion debt. Last Thursday, Telefónica’s O2 UK and Vodafone UK announced a similar agreement to cut investment costs, increase network footprint and speed up the roll-out of LTE services in the country.

Iusacell, which is owned by Mexican billionaire Ricardo Salinas is seeking to increase its mobile market share, having been boosted by a $1.6 billion investment from Mexican broadcaster Televisa. Through the investment Televisa received debt equivalent to 50% share in Iusacell but has been unable to take this stake having been blocked by Mexico’s antitrust regulators. Both companies are still awaiting the verdict for their appeal of the decision.

Mexico’s mobile market is dominated by Telcel which had 70.8% market share in March, according to TeleGeography. Movistar had 20.4% and Iusacell 4.8% during the same period.