It takes Diego Sepulveda about five minutes to walk from his apartment in Mexico City to a cell tower. But Sepulveda says he gets no reception at home. “I live three blocks away from this tower where I am supposed to get the best signal in Mexico City,” he says. “And I have no signal.”
Sepulveda thinks Mexico has poor service because there is no real competition. Most of the industry is controlled by Carlos “Slim” Helú, known in Mexico simply as Slim. Back in 1990, Mexico privatized the telecom industry and a conglomerate led by Slim bought most of it up. Today, the billionaire controls about 70 percent of the mobile phone market.
AT&T hopes to win over customers like Sepulveda. The company has purchased two Mexican mobile carriers, Iusacell and Nextel Mexico. AT&T plans to spend $3 billion expanding its high-speed mobile network, hoping to reach a 100 million Mexicans by 2018.
“The market demand for service, the amount of potential customers is growing very, very fast,” says Judith Mariscal, a telecommunications professor in Mexico City. She adds that there are a lot more new customers to snap up than in the more saturated U.S. market.
As the number of mobile subscribers surges, Mexico’s government is trying give consumers more choice. It recently passed regulations encouraging foreign investment and competition. The reforms aim to get Helú‘s market control below 50 percent.
Eli Noam, the director of Columbia University’s Institute for Tele-information, says this is why AT&T is investing now.
“I think the door is wide open for AT&T to double its market share.” That would be about 20 percent of Mexico’s market.
But Noam says the media is hyping this as a battle between AT&T and billionaire Helú. Noam says Helú would “actually like to have a relatively friendly competitor.” Like AT&T. It used to be an investor in Helú‘s company, and Noam says the two are still on friendly terms.
But if AT&T starts taking too much of the pie, Noam says you can expect Helú to stop playing nice.