By Anthony Harrup
MEXICO CITY--Mexican telecommunications company América Móvil
SAB on Friday approved the spinoff of its cellular towers into a
separate company, part of a restructuring plan that will see
billionaire Carlos Slim competing for the first time to rent
infrastructure to rivals in the mobile market.
América Móvil shareholders endorsed the creation of a new
company called Telesites SAB, which has 10,800 communications
towers, most of which can host several wireless operators.
Initially, its only client will be América Móvil's own wireless
unit Telcel, the dominant mobile operator in Mexico with 71 million
subscribers and about a 70% market share.
Shareholders will receive one Telesites share for every América
Móvil share they own.
The spinoff, which is still at least six weeks away, responds to
regulatory measures that América Móvil faces as the dominant
fixed-line and mobile carrier in Mexico. Aside from required
network sharing, América Móvil has to pay to connect calls to rival
carriers while completing incoming calls without charge.
Although Mr. Slim's company pledged "arms-length" commercial
relationships between Telesites and Telcel on equal terms to those
granted to other operators, the new concern faces the same
regulations that apply to América Móvil regarding access and
infrastructure sharing. Regulators can set rates to be charged by
Telesites if agreement isn't reached with customers.
With a tower density about a quarter of what it is in the U.S.,
Mexico offers much room for growth in the towers business, said
Spencer Kurn, a telecom analyst at New Street Research in New
York.
Mexico could follow what happened in the U.S., where the number
of towers increased rapidly in the past decade on demand for
wireless broadband services, he said. "It's the explosion of data
growth that has driven site expansion in the U.S."
The spinoff creates a new competitor for American Tower, the
largest of Mexico's tower operators with around 8,750 sites owned
or operated in the country at the end of 2014.
There will definitely be an impact on American Tower, although
Mexico only accounts for about 8% of the Boston-based company's
global revenue, Mr. Kurn said.
AT&T's Inc.'s recent entry into Mexico with the acquisition
of mobile company Grupo Iusacell made the outlook for American
Tower a bit better, and with the emergence of Telesites "now it's a
bit worse," he added.
American Tower didn't respond to requests for comment on the
implications of the Telesites spinoff. AT&T declined to comment
on whether it would consider leasing space from Telesites.
American Tower rents space in Mexico to Iusacell, Spain's
Telefónica, and to NII Holdings Inc.'s unit Nextel Mexico, which
AT&T has also agreed to buy. América Móvil is a client of
American Tower in parts of Latin America and the Caribbean.
América Móvil noted in a report that regulators estimate Mexico
needs to expand its number of radio bases to 80,000 from around
20,000 at present, "creating an important growth opportunity for
Telesites."
"We agree that growth of 3G and 4G data services should underpin
strong growth in the tower market," analysts with Credit Suisse
said in a recent report.
"On the other hand, Telesites may have reduced flexibility to
negotiate with clients due to its 'preponderance' [dominant] status
and competition could increase as the government pushes ahead with
its plans for a wholesale access network," they said.
The Mexican government is preparing to seek bids for a
nationwide wholesale wireless network that will compete with that
of América Móvil. The $10 billion shared network, which will be
managed independently by a company not involved in retail mobile
services, is expected to be operating by the end of 2018.
Write to Anthony Harrup at anthony.harrup@wsj.com
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