Mexico Telecommunications Report Q4 2011

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Mexico Telecommunications Report Q4 2011 Published on August 2011

Report Summary In Q111, the latest quarter where full results are available for operators, we calculate that the mobile market grew by 9.4% y-o-y, or 2.4% q-o-q. Net additions in Q111 totalled 2,015 ' with 1.671mn new postpaid customers and 336,000 new postpaid customers. The 9.4% expansion of the Mexican mobile subscriber base marks an increase from Q410's 9.2%. During the year to Q111, more than 9.5mn mobile customers were added to the sector. We adjusted our mobile subscriber forecasts for Mexico to incorporate new operator data for Q111. According to this data, the number of mobile subscribers grew quicker than expected in Q111, with total subscribers reaching 92.838mn. At the end of 2010, penetration hit 83.7%, up 6.3pps over the course of the year, and it reached 84.8% at the end of Q111. Therefore we increased our forecast for penetration to reach 89.39% by the end of 2011 and 97.87% by the end of 2015. Among the factors that are expected to contribute to solid rates of growth for the mobile sector is the expansion of network coverage into rural and remote communities. The additional mobile spectrum awarded to Mexico's mobile operators in August 2010 should allow them to expand their networks, enabling them to attract new customers. In July 2011 Nextel secured a 10-year loan from the China Development Bank for US$375mn. The loan will finance Nextel's 3G network throughout the country. BMI welcomes the shift to a W-CDMA network from the traditional iDEN network favoured by the company. We believe this network roll-out will help Nextel secure market share in Mexico, where there is room for growth in the mobile market. BMI is positive about the outlook for Huawei in Latin America, which secured contracts to build the W-CDMA network in Mexico and Brazil. Televisa continues to expand, following announcements that it is to partner with US movie rental company Netflix, which will launch in Latin America later in 2011. Televisa will provide Netflix with about 3,000 hours of soap operas and other programmes a year after their first broadcast. The terms of the deal were not disclosed and a Televisa spokesperson was not available at the time of writing. A Netflix spokesman says the company does not comment on deal terms. Key Developments in Mexico's mobile market include the news that Mexican operator MVS Comunicaciones collaborative project with Intel, Clearwire and Alestra, the company which offers AT&T telecoms services in Mexico, to introduce wireless internet services based on Long Term Evolution (LTE) technology has stalled. The three key partners withdrew financial support for the project after regulatory hesitation.

Table of Content Executive Summary 5 SWOT Analysis 6 Mexico Mobile Market SWOT Analysis 6 Mexico Wireline Business Environment SWOT..... 7 Mexico Political SWOT. 8 Mexico Economic SWOT ...... 8 Mexico Business Environment SWOT ... 9 Business Environment Ratings .... 10 Latin America Business Environment Ratings . 10 Mexico ..... 12 Table: Q411 Business Environment Rankings .... 14

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>> Get this Report Now by email! Industry Forecast Scenario ... 15 Mobile ...... 15 Table: Telecoms Sector ' Mobile ' Historical Data & Forecasts 15 ARPU ....... 17 Table: Telecoms Sector ' Mobile ARPU (MXN) ' Historical Data & Forecasts . 17 Fixed Line 18 Table: Telecoms Sector ' Fixed Line ' Historical Data & Forecasts .. 18 Internet .... 19 Table: Telecoms Sector ' Internet ' Historical Data & Forecasts ...... 19 Market Data Analysis .... 21 Mobile ...... 21 Table: Mexico Mobile Market, Q111 .. 24 Table: Mexico Mobile Market Net Additions, Q310-Q111 . 25 3G ....... 28 Mobile Contract Wins . 30 Table: Mobile Contract Wins ...... 30 Mobile Operator Data 31 Table: Mexico Market Overview . 31 Table: Telcel ....... 32 Table: Movistar .. 33 Table: Iusacell .... 34 Table: Nextel....... 35 Mobile Content 36 Regional Overview ...... 36 Country Outlook . 37 Value-Added Services Timeline... 42 Table: Value-Added Services Timeline ....... 42 Fixed Line 43 Table: Mexico Local Access Market, Q111 45 Regional Analysis ....... 46 Table: Telmex Income Statement, Q211 (MXNmn) ..... 47 Subscriber Types . 48 Long Distance ..... 48 Table: ILD Minutes By Country 2009 ('000) ...... 49 Pay-TV And Triple-Play ..... 49 Internet .... 52 Table: Mexico Internet Users By Access Type, 2002-2010 ('000) ....... 52 Table: Mexico Internet Subscription Market, 2006-2010 ('000) .. 53 Table: Mexico Fibre-Optic Network, 2002-2009 ('000km) . 57 Table: Mexico's Wireline Developments .... 58 Regulatory Developments ..... 59 Division Of Regulatory Responsibilities In Mexico..... 59 Mexico: Regulatory Bodies And Their Responsibilities ...... 59 Industry Developments ....... 63 Competitive Landscape 66 Competitor Analysis .... 66 Table: Key Players In Mexico Telecoms Sector .. 66

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>> Get this Report Now by email! Table: Operators' Financial Indicators, 2005-2009 ... 67 Company Monitor ' ....... 68 Pace Plc ... 68 Table: Pace Annual Financial Results (£mn)...... 68 Operator Profiles ... 72 Telmex 72 Axtel .... 76 Telcel (América Móvil) ....... 79 Telefónica Móviles México (Movistar) 83 Iusacell ....... 86 Nextel .. 90 Regional Telecommunications Penetration Overview ....... 93 Mobile ...... 93 Table: Regional Mobile Penetration Overview ... 93 Fixed Line 94 Table: Regional Fixed-Line Penetration Overview ..... 94 Internet/Broadband .. 95 Table: Regional Broadband Penetration Overview .... 95 Table:Regional Internet Penetration Overview .. 96 Glossary Of Terms 97 Table: Glossary Of Terms ... 97 BMI Methodology .. 98 How We Generate Our Industry Forecasts ...... 98 Table: Key Indicators For Telecommunications Industry Forecasts .... 98 Telecoms Business Environment Ratings 100 Risk/Reward Ratings Methodology ....100 Ratings System ...100 Indicators ...100 Table: Ratings Indicators ..101 Weighting ...102 Table: Weighting Of Indicators .102

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