Mexico's IFT Defers 2.5 GHz Band Wireless Spectrum Auction

Mexico’s telecom regulatory authority, the Federal Telecommunications Institute (IFT) recently deferred the planned auction of its 2.5 GHz band (2500MHz-2690MHz) wireless spectrum. It has been postponed from second half of 2016 to first quarter of 2017. Notably, wireless spectrums of 2.5 GHz band are very suitable for the deployment of 4G LTE networks.

The reason for the delay is to coincide it with a change in the bidding schedule for 4G LTE shared wireless network using 90 MHz of spectrum within the 700 MHz-band to cover nearly 98% of the population by 2018. In 2014, the Mexican government had undertaken this massive project of shared wireless network to instil competition in the highly monopolistic telecom industry.

Mexico's Secretariat of Communications and Transport (SCT) initially scheduled to declare the name of 700 MHz band tender winners on Aug 24, 2016.

However, SCT first delayed it to Sep 29 and then further to Nov 17. The SCT cited the number of tenders along with the complexity of queries and requests for clarification submitted by the bidders as the primary reason behind the delay. Final contracts will be signed on or before Jan 27, 2017.

In May 2015, the government of Mexico slashed its planned expenditure from $10 billion to $7 billion for the proposed deployment of the nationwide wholesale mobile network over a period of 10 years. The primary reason for the cut in the planned expenditure was the government’s belief that 12,000 mobile towers should suffice for the installation of this network as against 20,000 estimated previously.

Various leading telecom infrastructure equipment developers with global operational experience offered bids for the state-owned mobile network project. Notable among them were Ericsson (ST:ERICAs) AB (NASDAQ:ERIC) , Nokia (HE:NOKIA) Corp. (NYSE:NOK) , Cisco Systems Inc. (NASDAQ:CSCO) , Motorola Solutions Inc. (NYSE:MSI) , China Telecom Corp. Ltd. (NYSE:CHA) , Alestra, and Huawei Technologies Co. Ltd. The SCT received 39 tenders from interested parties.

Mexico is the largest economy in the Latin American region with a growing middle class population eager to spend more on high-speed wireless networks to facilitate the use of smartphones and tablets. Additionally, the wireless penetration rate is relatively low in the country. Given the potential for growth, an investment in the nation may augur well for telecom network equipment manufacturers.