Spotlight: How Mexico’s telecoms industry performed in Q1

Mexico, the second largest telecoms market in Latin America, saw industry revenues grow above the country’s GPD expansion in the first quarter, resuming a trend that had been set in recent years but was partially halted in 2021.

In January to March, revenues of companies in the sector rose 3.4% year-on-year to 129bn pesos (US$6.5bn), while Mexico’s GDP grew 1.6%.

The figures are from a study by The Competitive Intelligence Unit (CIU), a consultancy and research firm specializing in the Mexican market, and point to a recovery in the sector.

Between the second and third quarters of 2021, the telecom sector in Mexico grew at a slower pace than GDP.

Speaking in a webinar to present the study, CIU’s economic analyst Carlos Roberto Hernándes Sanchez, one of the authors of the report, said the change in the trend was due to the fact that telecom revenue fell much less than GDP in the same quarters of 2020. Hence the smaller “bounce back” growth in this industry.

Source: The CIU

In 2021, following a drop of 0.7% in 2020 at the height of the pandemic, telecommunications revenues in Mexico grew 6% year-over-year, driven mainly by the television and mobile services segment.

Of the total 129bn pesos in telecom revenues in Q1 this year, the mobile segment contributed 57.3%, pay TV 25.2% and fixed services 17.5%. Compared to the first quarter of 2021, according to the CIU analysis, mobile and TV upped their revenue share, while the fixed segment contracted. 

In annual terms, the mobile segment grew revenues by 3.1bn pesos year-over-year in Q1 and the TV segment by 1.9bn pesos. The fixed business, in turn, fell by 800mn pesos.

In terms of accesses, roughly 1.3mn net mobile lines were added in Mexico during the first quarter, up 5.3% year-over-year, taking the country’s total base to 133.3mn mobile lines, said CIU.

According to analyst Teo Piedras, the main drivers of this growth were “aggressive” offerings and the reopening of the economy in recent months.

Heading the mobile expansion were the mobile virtual network operators (MVNOs). This segment, said CIU, continues to see exponential growth in Mexico, being responsible for 595,000 of the total net additions in the quarter, up by 107% year-over-year.

Among the traditional, incumbent mobile network operators (MNOs), Telcel saw 451,000 net additions, up 3.4% year-over-year, and AT&T 178,000 (up 8%). Movistar, in turn, saw a decline of around 5.2%, according to the CIU.

Growth was also seen in the different types of business.

“In fact, 1Q22 is the first period in which both prepaid and postpaid subscriptions exceed levels seen in the pre-pandemic (1Q20) period,” consultancy Telconomia said in a separate report on Mexico, adding that only prepaid figures had been above pre-pandemic performance. 

Telconomia estimates that Mexico had just over 130mn mobile subscriptions as of March, of which 84% were prepaid and 16% postpaid.

With numbers slightly different from those of The CIU, Telconomia reports that mobile revenues were 73.2bn pesos in Q1, up 3% year-on-year but down 5.4% over the fourth quarter of 2021. 

The figures, however, do not take into account inflation.

“Given the accumulated inflation between 2021 and 2022, the mobile business figure for 1Q22 implies a contraction in real terms, both year-on-year and sequentially,” said the consultancy.

INTERNET PENETRATION GROWS

Mexico was already on a post-pandemic trend last year.

At the end of 2021, 75% of the population over the age of six was an internet user, according to data in a separate CIU report based on 90mn people.

Internet users grew 6.4% compared to 2020, driven by the digital inclusion effects of the pandemic. 

Also, according to that study, 66% of internet users in Mexico accessed the web both from fixed and mobile networks. Only about 26% only used fixed internet (home Wi-Fi, for example), and 8% only mobile networks.

SO AS STREAMING

In 2021, Mexico registered 12mn new subscriptions to video platforms, such as Netflix, Amazon Prime and Disney Plus.

The figure represented an annual increase of 13.8%, says the CIU, with the pandemic being the main cause.