MEXICO CITY – The Mexican unit of Spain’s Telefonica plans to invest roughly 7 billion pesos ($500 million) this year to achieve better coverage and service quality, its CEO said Thursday.
Juan Antonio Abellan said accumulated investment over the company’s 11 years in Mexico, including the purchase of wireless operations and outlays to expand infrastructure and other services, amounts to some $12 billion.
The plan is to maintain a high level of investment in Mexico, although the specific amount to be spent in 2013 has not yet been determined, he said at a press conference.
The executive said Mexico is a fast-growing Latin American country in which the middle class accounts for 53 percent of the population, though he noted that cellular penetration there still lags behind Brazil and Argentina.
He also said the wireless market has been dominated for years by a single operator – Telcel, the Mexican unit of Mexico City-based regional giant America Movil – and contrasted that situation with Germany and Spain, whose market leaders have 35 percent and 42 percent market shares, respectively.
That level of market concentration does not foster lower prices, Abellan said, noting that Telefonica’s competitors still charge for “roaming,” or calls placed outside the contracted coverage area.
The executive recalled that Telefonica’s Mexico unit and No. 3 wireless operator Iusacell recently formed a network-sharing alliance, saying the partnership could benefit 27 million cellular subscribers.
Telefonica, which operates in Mexico under the Movistar brand, on Thursday launched a comprehensive telecommunications service that includes fixed and mobile telephony, Internet and radio and offers subscribers access to multiple, state-of-the-art services.
The new product marks the start of a new era for Movistar, a revolution in country’s telecommunications and a big leap for the benefit of Mexican consumers, Abellan said.
He said the new product entirely eliminates “national roaming” charges, while all calls to landline or cellular phones in Mexico, the United States and Canada will have a single rate of $0.07 per minute.
Telefonica is Mexico’s No. 2 wireless operator with a 22 percent market share and its network covers 90 percent of the population. EFE