Telefonica gives up Mexico network, but it's not an MVNO

Telefonica has completed the migration of its mobile traffic to AT&T’s network in Mexico and has handed back the last of its spectrum to the regulator, but it remains pretty insistent that that does not make it an MVNO.

The migration was tied up in the past few days, according to various local press reports. The project dates back to late 2019 when Telefonica announced that Movistar, its Mexican operating unit, had brokered a carriage deal with AT&T for current 3G and 4G traffic, as well as for future access technologies.

At the time, Telefonica – understandably – presented the deal with a positive spin for the market. Such a move is “in line with international trends” and the emergence of new models designed to help telcos keep up with demand. It would provide better connectivity to Mexicans, the telco promised, and help maintain competition against the dominant player – America Movil.

But behind the scenes it was all about money. By ditching its network, Telefonica saves a fortune, including, but not limited to, the market’s hefty spectrum usage charges that operators have long bemoaned.

Ana de Saracho, head of public affairs, regulation and wholesale at Telefónica México, this week confirmed to BNamericas that the network migration, which was carried out in phases, was complete and that all its spectrum holdings are back with regulator the IFT.

Those frequencies will be wrapped into Mexico’s 5G spectrum auction, which is due to take place later this year, El Economista reported, including airwaves in the 850 MHz, 1.9 GHz and 2.5 GHz bands. The IFT’s radio spectrum unit director Alejandro Navarrete Torres told the paper that the frequencies could be used for the roll out of 5G services or for operators to boost their 4G offerings.

Either way, there are big question marks over that planned auction.

Mexico’s most recent spectrum sale in October last year ended in disappointment – for the state, at least – when it brought in just 1.35 billion pesos (US$65.5 million) after only three of the 41 available blocks were taken up, AT&T and America Movil being the buyers.

You have to ask whether the country can realistically hope for a better result this time around. While Movistar’s de Saracho declined to give BNamericas a definitive answer as to whether Telefonica would participate, the smart money is on it giving it a miss.

“The spectrum cost issue has been exactly the same since 2019. There has been no reduction, no change in policy regarding privileging connectivity over collection,” she said.

With connectivity over AT&T’s network at its disposal, plus a deal with shared network operator Altan Redes – it’s in difficulties but still functional, and has new state backing – Movistar is unlikely to be in any hurry to build out its own infrastructure again. That’s an interesting position for a country’s second-largest mobile operator – de Saracho puts its market share at 18% – to find itself in.

So, is Movistar now effectively an MVNO in Mexico? It insists it is not.

“We are an alliance company,” de Saracho said, noting that a number of players have moved towards network-sharing; Altan Redes is already there, and AT&T will “surely” start network-sharing too, she said.

“This does not mean being an MVNO. We would be a very large MVNO having 23 million clients, and with very large proprietary infrastructure, like our transport networks. In fact, we had to deploy about 250km of fibre optics to make all the connections behind AT&T’s base stations,” de Saracho said. “Network traffic and operations management fall on us. And we have eight MVNOs.”

That’s a pretty convincing case for not being an MVNO. But neither can it be classed as an MNO. It’s starting to look like we need some new acronyms in this industry.

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