Published June 13, 2012
Spain's Telefonica and Mexico's Iusacell signed a network-sharing and infrastucture build-out deal Wednesday aimed at reaching some 27 million subscribers in Mexico and challenging monopolistic practices.
Executives of the two operators, which compete in Mexico against Carlos Slim-controlled America Movil, said the goal of the agreement is to bridge the digital divide between rural and urban zones in Mexico and invest in the latest technologies.
The head of Telefonica's Mexico unit, Juan Abellan, and Iusacell CEO Adrian Stekel stressed the importance of the alliance, saying it was aimed at at combating the dominance of Telcel, America Movil's local cellular unit, and its sister fixed-line operator Telmex, and benefiting users.
"We've decided to join forces for the benefit of users," Abellan said, adding that "the monopoly practices that have prevailed in Mexico only have delayed the sector's development."
For his part, Stekel said eliminating unfair competition "puts the best services at the reach of all Mexicans, leveraging telecommunications technologies to the maximum."
The agreement seeks the transformation and modernization of Mexican telecommunications through collaboration on 4G infrastructure, WiFi wireless access points and fiber-optic networks.
The two telecom firms said they will share each other's wireless towers and cooperate on a infrastructure build-out plan to expand coverage to between 85 percent and 90 percent of the population.
The executives said the five-year agreement will begin to take effect in approximately three weeks.
The head of Mexico's Cofetel telecoms regulator, who attended the signing ceremony at a luxury hotel in Mexico City, said the pact complied with regulatory guidelines.
Telefonica, which operates in Mexico under the Movistar brand, controls 22 percent of the country's wireless market, while Iusacell has around 5 percent.
Telcel is the dominant wireless operator in Mexico with a roughly 70 percent market share.
The alliance is part of a strategy by Telefonica in particular and the sector in general to share infrastructure to reduce costs and more quickly expand coverage. EFE