Mexico Telecommunications Report Q3 2012

With its relatively low telecoms penetration, Mexico harbours one of the more attractive investment potential among the countries in Latin America and this is reflected in BMI’s Telecoms Risk/Reward Ratings for the region. While we are cautiously optimistic of Mexico’s short-term growth story, the skewed competitive landscape in favour of incumbents Telcel and Telmex, and the regulator’s inability to improve the situation threaten to prevent the growth prospects from materialising.

Our mobile subscriber forecast for Mexico was downgraded after the sector unexpectedly contracted in Q411. However, we continue to see strong growth in the prepaid dominant mobile market.

Our forecast for Mexican mobile ARPU rates envisages the average ARPU for the market falling to MXN138 by the end of 2016. With considerable pressures on operators to expand services and continue driving growth, Mexico looks set to experience a definite downward trend for ARPU. Meanwhile, due to a lack of new data from the regulator, we have retained our subscriber forecasts for the number of internet users, as well as fixed-line and broadband subscribers in Mexico.

BMI continues to be concerned about Mexico’s regulatory environment and the unlevel playing field. In Q112, the credibility of regulator Cofetel was dealt a number of blows. Firstly, its president, Mony de Swaan, was put under investigation following claims that he awarded two contracts worth roughly US$200,000 for businesses run by close friends. Secondly, an OECD report found that the cost to the Mexican economy of the inefficiencies in the sector was US$25bn a year or 1.8% GDP per annum.

However, in March 2012, Mexican antitrust watchdog, Comisión Federal de Competencia (Cofeco), rejected an appeal filed by local telecoms operator América Móvil against a ruling that it holds a dominant position in the market for mobile call termination. The move may result in asymmetric regulation on the operator's wireless unit Telcel by the Cofetel. Nevertheless, more steps are required to erode the dominance of América Móvil.

Mexico remained in third position in BMI’s Latin America Telecoms Risk/Reward Ratings for Q312, although its scores fell the most, compared with all the other countries. Despite Mexico's continued vulnerability to external shocks, we forecast economic growth will be bolstered by solid private consumption and robust investment in the coming quarters. As such, we maintain our above-consensus real GDP growth forecast of 3.4% for 2012, and are upgrading our 2013 forecast from 2.7% to 3.0%.

Mexico Telecommunications Report Q3 2012

Published: May 2012    No. of Pages: 108      Price: US $ 1175     
                  

 

Table of Contents

Executive Summary . 5
SWOT Analysis 6
Mexico Mobile Market SWOT Analysis . 6
Mexico Wireline Business Environment SWOT .. 7
Mexico Political SWOT .. 7
Mexico Economic SWOT ... 9
Mexico Business Environment SWOT .. 10
Risk/Reward Ratings . 11
Latin America ... 11
South America Risk/Reward Ratings, Q312 . 14
Mexico .. 14
Industry Forecast Scenario .. 16
Mobile ... 16
Table: Telecoms Sector – Mobile – Historical Data & Forecasts 16
ARPU 18
Table: Telecoms Sector – Mobile ARPU (MXN) – Historical Data & Forecasts . 18
Fixed Line . 20
Table: Telecoms Sector – Fixed Line – Historical Data & Forecasts .. 20
Internet.. 22
Table: Telecoms Sector – Internet – Historical Data & Forecasts .. 22
Market Data Analysis . 24
Mobile ... 24
Table: Mexico Mobile Market, Q411 ... 28
Table: Mexico Mobile Market Net Additions (‘000) 29
3G 32
Table: Mobile Contract Wins ... 34
Mobile Operator Data . 35
Table: Mexico Market Overview .. 35
Table: Telcel 36
Table: Movistar 37
Table: Iusacell . 38
Table: Nextel 39
Mobile Content ... 40
Regional Overview ... 40
Country Outlook .. 42
Value-Added Services Timeline 47
Table: Value-Added Services Timeline 47
Fixed Line . 48
Table: Mexico Local Access Market, Q311 .. 50
Regional Analysis 51
Table: Telmex Income Statement, Q411 (MXNmn) .. 51
Subscriber Types .. 53
Long Distance .. 53
Table: ILD Minutes By Recipient Country Q211 (’000) .. 54
Pay-TV And Triple-Play... 54
Internet 58
Table: Mexico Internet Users By Access Type, 2002-2010 (’000) ... 58
Table: Mexico Internet Subscription Market, 2006-2010 (’000) .. 59
Table: Mexico Fibre Optic Network, 2002-2009 (’000km) .. 62
Table: Mexico’s Wireline Developments .. 63
Regulatory Developments 65
Division Of Regulatory Responsibilities In Mexico .. 65
Mexico: Regulatory Bodies And Their Responsibilities ... 65
Industry Developments . 70
Competitive Landscape 71
Table: Key Players In Mexico Telecoms Sector ... 71
Company Monitor .. 72
Alcatel-Lucent, Selected Latin America Contracts, Q411 And Q112 ... 75
Operator Profiles ... 76
Telmex.. 76
Axtel . 80
Telcel (América Móvil) 83
Telefónica Móviles México (Movistar) . 87
Iusacell 90
Nextel ... 93
Regional Telecommunications Penetration Overview ... 95
Mobile ... 95
Table: Regional Mobile Penetration Overview 95
Fixed Line . 96
Table: Regional Fixed-Line Penetration Overview .. 96
Broadband 97
Table: Regional Broadband Penetration Overview . 97
Demographic Outlook ... 98
Mexico's Population By Age Group, 1990-2020 ('000) 99
Mexico's Population By Age Group, 1990-2020 (% of total) . 100
Mexico's Key Population Ratios, 1990-2020.. 101
Mexico's Rural And Urban Population, 1990-2020 ... 101
Glossary Of Terms ... 102
Table: Glossary Of Terms .. 102
BMI Methodology . 103
How We Generate Our Industry Forecasts . 103
Table: Key Indicators For Telecommunications Industry Forecasts .. 103
Telecoms Risk/Reward Ratings ... 105
Risk/Reward Ratings Methodology 105
Ratings System ... 105
Indicators ... 105
Table: Ratings Indicators ... 106
Weighting ... 107
Table: Weighting Of Indicators.. 107Table: Telecoms Sector – Mobile – Historical Data & Forecasts . 16
Table: Telecoms Sector – Mobile ARPU (MXN) – Historical Data & Forecasts . 18
Table: Telecoms Sector – Fixed Line – Historical Data & Forecasts . 20
Table: Telecoms Sector – Internet – Historical Data & Forecasts . 22
Table: Mexico Mobile Market, Q411 . 28
Table: Mexico Mobile Market Net Additions (‘000) . 29
Table: Mobile Contract Wins . 34
Table: Mexico Market Overview . 35
Table: Telcel . 36
Table: Movistar. 37
Table: Iusacell . 38
Table: Nextel . 39
Table: Value-Added Services Timeline . 47
Table: Mexico Local Access Market, Q311 . 50
Table: Telmex Income Statement, Q411 (MXNmn) . 51
Table: ILD Minutes By Recipient Country Q211 ('000) . 54
Table: Mexico Internet Users By Access Type, 2002-2010 ('000) . 58
Table: Mexico Internet Subscription Market, 2006-2010 ('000) . 59
Table: Mexico Fibre Optic Network, 2002-2009 ('000km) . 62
Table: Mexico's Wireline Developments . 63
Table: Key Players In Mexico Telecoms Sector . 71
Table: Regional Mobile Penetration Overview . 95
Table: Regional Fixed-Line Penetration Overview . 96
Table: Regional Broadband Penetration Overview . 97
Table: Glossary Of Terms . 102
Table: Key Indicators For Telecommunications Industry Forecasts . 103
Table: Ratings Indicators . 106
Table: Weighting Of Indicators. 107

Bangladesh Telecommunications Report Q3 2012

In this quarter’s update, we have updated the Bangladesh telecoms report with latest figures from the Bangladesh Telecommunications Regulatory Commission (BTRC) as well as Bangladeshi telecoms operators. Despite the new data, there were no major changes to our forecast scenarios as the various subscriber growth trajectories are within our expectations.

The total number of mobile subscribers in Bangladesh at the end of 2011 was slightly higher than we had previously estimated. According to data provided by the BTRC and mobile operators, there were 92.570mn subscribers, a penetration rate of 61.5%. BMI forecasts the penetration rate to increase to 72.9% in 2012, which places in the country in 17th position out of the 18 Asia Pacific countries covered in our reports. The underdeveloped situation is also present in the fixed-line and broadband markets as we envisage only 1.069mn fixed-line and 448,000 broadband subscribers in the country at the end of 2012.
While we expect growth in all three sectors, the pace is likely to result in Bangladesh further lagging behind its peers.

At present, the 3G auction in Bangladesh is scheduled for September 2012, although there is still a possibility that the process could be delayed. Regional peer Pakistan, which initially planned to auction licences in March 2012, has postponed its auction without disclosing a new timeframe, and Bangladesh could follow a similar path. The biggest threat to the 3G auction in Bangladesh is the dispute between the regulator and mobile operators over fees and taxes associated with the renewal of 2G licences, which expired in November 2011. Operators could scrutinise the relevant regulations in order to prevent a repeat of the 2G renewal saga.

The introduction of 3G services could threaten Bangladesh’s WiMAX industry, which had 323,307 subscribers at the end of February 2012. We envisage strong competition between the 3G licence winners, as well as a suite of low-cost mobile devices such as smartphones, which would spur adoption among price-sensitive consumers. Despite the imminent threat, there is a positive that could emerge from the launch of 3G services. Operators are expected to aggressively market their services, thereby raising the profile and awareness for mobile broadband technologies. While we expect customers with basic needs to be attracted to 3G services, consumers and businesses that demand higher speeds could turn to WiMAX..

Bangladesh had a Telecoms Rating score of 48.9 in BMI’s latest Asia Pacific Telecoms Risk/Reward Ratings. We firmly believe that Bangladesh is poised to record its slowest rate of growth in three years in FY2011/12 (July-June), with real GDP growth expected to come in at 5.9% (from 6.7% in FY2010/11). Consensus expectations (for 6.5% growth) remain overly optimistic, given the clearly deteriorating economic picture (for example the ongoing deceleration of M3 money supply growth and the general slowdown in industrial production activity). Meanwhile, public unrest due to heightened tensions between the ruling Awami League (AL) and its main opposition, the Bangladesh Nationalist Party (BNP), will unlikely subside as both sides continue to confront each other regarding the restoration of the caretaker government system (abolished by the AL-led parliament in 2011). Bangladesh scores a low 67.1 (out of 100) in our short-term political risk ratings as it performs poorly in terms of social stability. That said, we note that the AL could be forced to compromise as it slowly loses public support, while the BNP gradually gains favour.

Q3 2012 Telecommunications Report of Bangladesh

Published: May 2012       No. of Pages: 95       Price: US $ 1175    
      

 

Table of Contents

Executive Summary . 5
SWOT Analysis 7
Bangladesh Wireline Business Environment SWOT ... 7
Bangladesh Mobile Business Environment SWOT . 8
Bangladesh Political SWOT ... 9
Bangladesh Economic SWOT .. 10
Bangladesh Business Environment SWOT ... 10
Asia Pacific Risk/Reward Ratings 11
Asia Pacific Telecoms Risk/Reward Ratings 15
Bangladesh ... 16
Industry Forecasts . 18
Mobile ... 18
Table: Telecoms Sector – Mobile – Historical Data & Forecasts 18
ARPU 20
Table: Bangladesh Mobile ARPU – Historical Data and Forecasts (BDT), 2009-2016 .. 20
Fixed Line . 22
Table: Telecoms Sector – Fixed Line – Historical Data & Forecasts, 2009-2016 ... 22
Internet.. 24
Table: Telecoms Sector – Internet & Broadband – Historical Data & Forecasts, 2009-2016 . 24
Market Data Analysis . 26
Mobile Market... 26
Table: Bangladesh Wireless Market, December 2011 . 27
Table: Bangladesh Wireless Market Net Additions, Q411 ... 28
Subscriber Mix . 29
ARPU ... 30
3G 31
Mobile Contract Wins .. 33
Table: Mobile Contract Wins, 2008-2012 33
Mobile Operator Data .. 34
Table: Market Overview .. 34
Table: Grameenphone . 34
Table: Banglalink 36
Table: Robi Axiata ... 37
Table: Warid Telecom .. 38
Table: Citycell . 38
Table: Teletalk . 38
Mobile Content . 39
Regional Outlook . 39
Table: Selected NFC Developments, 2011 ... 41
Country Outlook .. 44
Table: Selected VAS Services Launched, 2010-2012 ... 47
Fixed Line . 48
Table: Bangladesh Fixed-Line Market, May 2010 ... 49
Broadband 50
VoIP Services 53
WiMAX.. 56
Regulatory Environment ... 58
Regulatory Developments 59
Competitive Landscape 61
Competitor Analysis .. 61
Table: Key Players – Bangladesh Telecoms Sector . 61
Company Monitor .. 62
Samsung Electronics . 62
Samsung Electronics Financial Performance (KRWbn) .. 62
Operator Profiles ... 68
Grameenphone . 68
Banglalink 72
Robi Axiata Bangladesh ... 74
Citycell . 77
Bangladesh Telecommunications Company (BTCL) 78
Regional Telecommunications Penetration Overview ... 82
Fixed Line . 82
Table: Regional Fixed-Line Penetration Overview .. 82
Mobile ... 83
Table: Regional Mobile Penetration Overview 83
Broadband 84
Table: Regional Broadband Penetration Overview . 84
Country Snapshot: Bangladesh Demographic Data .. 85
Section 1: Population 85
Table: Demographic Indicators, 2005-2030 85
Table: Rural/Urban Breakdown, 2005-2030 86
Section 2: Education and Healthcare 86
Table: Education, 2001-2003 ... 86
Table: Vital Statistics, 2005-2030 86
Section 3: Labour Market and Spending Power 87
Table: Employment Indicators, 2001-2006 .. 87
Table: Consumer Expenditure, 2000-2010 (US$) 87
Table: Average Annual Manufacturing Wages, 1996-2002 . 88
Glossary Of Terms . 89
Table: Glossary Of Terms 89
BMI Methodology ... 90
How We Generate Our Industry Forecasts ... 90
Table: Key Indicators For Telecommunications Industry Forecasts 90
Telecoms Business Environment Ratings .. 92
Risk/Reward Ratings Methodology .. 92
Ratings System . 92
Indicators . 92
Table: Ratings Indicators . 93
Weighting . 94
Table: Weighting Of Indicators 94
Sources 94Table: Telecoms Sector – Mobile – Historical Data & Forecasts . 18
Table: Bangladesh Mobile ARPU – Historical Data and Forecasts (BDT), 2009-2016 . 20
Table: Telecoms Sector – Fixed Line – Historical Data & Forecasts, 2009-2016 . 22
Table: Telecoms Sector – Internet & Broadband – Historical Data & Forecasts, 2009-2016 . 24
Table: Bangladesh Wireless Market, December 2011 . 27
Table: Bangladesh Wireless Market Net Additions, Q411 . 28
Table: Mobile Contract Wins, 2008-2012 . 33
Table: Market Overview . 34
Table: Grameenphone . 34
Table: Banglalink . 36
Table: Robi Axiata . 37
Table: Warid Telecom . 38
Table: Citycell . 38
Table: Teletalk . 38
Table: Selected NFC Developments, 2011 . 41
Table: Selected VAS Services Launched, 2010-2012 . 47
Table: Bangladesh Fixed-Line Market, May 2010 . 49
Table: Key Players – Bangladesh Telecoms Sector . 61
Table: Regional Fixed-Line Penetration Overview . 82
Table: Regional Mobile Penetration Overview . 83
Table: Regional Broadband Penetration Overview . 84
Table: Demographic Indicators, 2005-2030 . 85
Table: Rural/Urban Breakdown, 2005-2030 . 86
Table: Education, 2001-2003 . 86
Table: Vital Statistics, 2005-2030 . 86
Table: Employment Indicators, 2001-2006 . 87
Table: Consumer Expenditure, 2000-2010 (US$) . 87
Table: Average Annual Manufacturing Wages, 1996-2002 . 88
Table: Glossary Of Terms . 89
Table: Key Indicators For Telecommunications Industry Forecasts . 90
Table: Ratings Indicators . 93
Table: Weighting Of Indicators. 94