More than 15 years after it first entered the market south of the border, Telefonica is reportedly mulling an exit from Mexico amid increasing pressure from competitors like AT&T.
According to digital Spanish newspaper VozPopuli, the telecom giant isn’t hiding the fact that it’s looking for an out from a market where it is third out of three major operators.
As of the end of the first quarter 2017, Telefonica Mexico had 25.7 million subscribers in the country, a figure that was virtually flat year over year. The carrier posted net losses of 899,000 in Mexico during the quarter, mainly in the prepaid segment, and revenues of 314 million euros dropped 16.5 percent year over year. While the carrier did grow access on smartphones and LTE service in the quarter, penetration stood at only 48 percent for smartphones and just 15 percent for LTE access in the period.
The report indicated these sliding figures come courtesy of pressure from new market entrant AT&T and an America Movil brand that has become more aggressive in the wake of movement by Mexican regulators to break up its former dominance of the wireless market.
AT&T purchased Mexican operator Iusacell for $2.5 billion in 2014 and combined it with its other Mexico operator acquisition Nextel. By August 2015 AT&T had already ramped up its rebranding efforts in the country and announced plans to invest $3 billion to expand wireless coverage to 100 million people in the country by 2018.
AT&T has found success in the country, most recently adding 633,000 subscribers in Mexico during a quarter in which it lost 348,000 postpaid phone subscribers in the United States. The carrier is nowalso planning IoT network roll outs south of the border in an effort to snag a large share of that segment as well.
Telefonica previously indicated it was open to deals with AT&T and America Movil to expand its network in Mexico, but thinking now appears to have shifted to an all-out exit.
As VozPopuli indicated, the move could help Madrid-based Telefonica reduce its $48.8 billion euro debt burden.