Without a clear revenue plan, Telefonica begins to abandon concessions in Mexico
Source：Notimex
From：Taiwan Trade Center Mexico
Update Time：2020/02/13
With the aim of reducing costs, Telefónica is beginning to return spectrum frequencies in the 800 MHz and 1.9 GHz bands (PCS) to the Mexican government from 31st December 2020 until 30th June 2022. This is the result of a request submitted by the company to the Mexico´s Federal Institute of Telecommunications (IFT) and approved by that regulatory body on December 4th.
The Spanish company hopes to save US $0.25 billion but the question remains among investors: Telefónica has yet to demonstrate an action plan to increase its profits. The company, which announced its exit from Latin America, is focused either on reducing debt or on lowering expenses, but there is no horizon at the moment that talks about new business.
According to its balance sheet, only the payments for the spectrum input are equivalent to 15% of Telefonica's annual revenue in Mexico compared to the equivalent of 4.0% of its revenue from its operations in the other 17 markets where it also offers services.
With the return of the frequencies, the Mexican State, via the IFT, will proceed to their recovery and eventual placement in the market for those interested, through new bidding processes, which would occur beyond 2023, due to the fact that the last frequency that Movistar will return will be in the middle of 2022 and on the way to that date the sector regulator has planned to bid other spectrum packages in the 600 MHz and 3.5 GHz bands for 5G services, of which Telefonica has expressed the possibility of competing for them.
Source：http://www.notimex.gob.mx/