x
4G/3G/WiFi

Can Mexico's Wholesale 4G Plan Defy the Odds?

Expected to attract more than $7 billion in investment over a nine-year period, Mexico's plan to build a nationwide wholesale 4G network is definitely not short on ambition.

If the scheme's public- and private-sector backers can pull it off, Mexico will be left with a state-of-the-art network that retailers can use to provide mobile services throughout the country. It will incorporate many of the building blocks of 5G technology, and could serve as an example to players in other parts of the world whose markets face stagnation.

Branded "Red Compartida" (Shared Network), the scheme received a big boost at the end of March when Nokia Corp. (NYSE: NOK) and Huawei Technologies Co. Ltd. were chosen as key infrastructure partners. Nokia is to take charge of network construction in the north of Mexico and for the network core, while Huawei will have responsibility for the central and southern regions.

The expertise of two of the world's biggest equipment vendors will be invaluable to the "greenfield" player. The core network will be fully "virtualized," said Nokia in its statement, potentially giving Red Compartida an edge over network rivals still wrestling with a software overhaul of their systems. The use of 4.5G technologies should guarantee customers the highest-speed mobile services available. And the network will be designed to facilitate a future 5G upgrade that is as smooth and pain-free as possible. In its own statement, Nokia described the contract win as its biggest ever in Latin America.


Want to know more about 4G LTE? Check out our dedicated 4G LTE content channel here on Light Reading.


Yet the deals with Nokia and Huawei, which did not publish its own press release, are a reminder of the task ahead of Red Compartida. Mexico's sheer vastness, the lack of existing business on which to build, the rising levels of competition in the country's telecom market and the disappointments surrounding wholesale network ventures in other geographies all cast a long shadow over Red Compartida's prospects.

Skepticism that such a venture could succeed was apparent in November last year, when the Altán Consortium was awarded the project following a government tender that failed to attract much interest. Rivada Networks, the only other bidder, was eventually disqualified for not presenting financial commitments on time, clearing the way for Altán.

Made up of several Mexican and international investors, that consortium counts Morgan Stanley Infrastructure as its biggest shareholder, with a 33.38% stake in the business. The China Mexico Fund, which is managed by a unit of the World Bank, holds a 23.36% stake, making it Altán's second-biggest shareholder. Mexican telcos Axtel S.A.B. and Megacable Comunicaciones will contribute local expertise, each taking a 4.01% stake. Other significant shareholders include CDPQ, a North American pension fund manager, and Miguel Escobedo, a Mexican lawyer.

Altán's immediate challenge is to build a network capable of supporting a service launch by March 2018. Although its ultimate target is to cover 92.2% of the Mexican population, the operator aims to provide services to about 30% of people on launch. It has reportedly benefited from subsidized access to the 700MHz spectrum band, which governments in other countries have auctioned off for lucrative sums. Because signals travel much further in this sub-GHz band than in higher ranges, it should help Altán to roll out a network speedily and relatively economically.

Next page: Warning signs

1 of 2
Next Page
Be the first to post a comment regarding this story.
HOME
Sign In
SEARCH
CLOSE
MORE
CLOSE