Mexico's shared network exits bankruptcy but faces a tricky future

Altan Redes, the company charged with rolling out Mexico’s shared LTE mobile network, has exited bankruptcy protection following a state bailout, but question marks over its viability still remain.

The firm filed for bankruptcy protection under Mexican law in mid-2021 and almost a year later hammered out a financing arrangement with significant government help; Mexico’s state-owned development bank agreed to contribute US$161 million of a $388 million credit line. A bankruptcy court in Mexico City approved the deal late last month, the operator has now revealed, bringing the formal bankruptcy process to a close.

“We are grateful for the trust and support of our investors, clients, suppliers and creditors over the past months,” said Altan Redes chief executive Carlos Lerma, in a Spanish language statement. “We reiterate our commitment to fulfilling the mandate of providing Internet to all Mexicans and promoting competition in the sector.”

The participation of the Mexican Development Bank in Altan Redes’ board of directors will help the company align the needs of the telecoms space with other other government agencies “in order to enhance results and achieve maximum efficiency in the operation of our network,” the company said.

“The conclusion of the commercial bankruptcy process, together with the entry of new resources, allows investment in Red Compartida, giving continuity to the business and sustaining the generation of future flows that make Altán Redes viable,” it added.

All of which shows a certain level of optimism for the future, but that could well be misplaced, given the success – or lack thereof – of the shared network scheme so far.

The government’s plan was essentially to roll out a 4G mobile network on a wholesale basis that would be used by the country’s mobile operators and MVNOs, and in 2017 it handed the country’s available 700 MHz spectrum to Altan Redes to do just that. The scheme formed part of its endeavours to flatten the competitive landscape in the telecoms industry and essentially curb the influence of incumbent America Movil’s Telcel.

The trouble was, Altan Redes struggled to meet its rollout targets, which were re-set at the start of the year as a result, and failed to attract the right users. The mobile network operators have for the most part rolled out their own networks…and are wholesaling those networks too. Even when Telefonica made good on its plan to ditch its own mobile infrastructure in Mexico and give back its spectrum earlier this year, it migrated much of its traffic to AT&T’s network, as well as brokering a deal with the shared network.

Similarly, telecom-as-a-service (TaaS) platform provider Oxio has just announced a deal with Telcel to add to its existing partnership with Altan Redes, BNAmericas reports.

Altan Redes is gaining customers, but it is not solely the infrastructure of choice for many.

Its own figures show that it reaches over 70% of the population, covering more than 12,000 localities with between 250 and 5,000 inhabitants, as well as close to 100,000 locations with fewer than 250 inhabitants.

That last point helps to illustrate the nature of the problem. Rolling out network to sparsely populated areas does not come cheap and returns on investment are hard won.

Altan Redes may have shored up its finances with the help of the state, but its business model from here on in remains challenging.

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