The auction of personal communications services licenses in Mexico’s nine bidding regions was completed May 8, officially liberalizing the much sought-after wireless market there and raking in $1.06 billion after 128 rounds.
Mexico’s PCS auction was modeled after the spectrum-auction process in the United States. However, the Mexico licenses are for 20-year terms, while U.S. licenses are for 10 years. At the end of the license period, the Mexican government, which did not provide any financing of the winning bids, will require a payment based on the value of the license.
Each existing Mexican cellular carrier could bid on 30-megahertz PCS spectrum blocks in the regions it was not already licensed to provide cellular services. The cellular incumbents also could bid on 10-megahertz PCS blocks in any region, as well as 25-megahertz blocks at 3.4-3.7 GHz, including those where they already were licensed to provide service.
The Comision Federal de Telecomunicaciones (Cofetel), Mexico’s equivalent of the Federal Communications Commission in the United States, awarded all nine of the 30-megahertz A-band personal communications services licenses to the SPC consortium, which is headed by the same group that owns the Mexican broadcaster TV Azteca and the Elektra chain of retail stores. The SPC consortium also won a license in the 3.4-3.7 GHz range in each of the nine regions for $26.8 million.
Qualcomm Inc. won 30-megahertz B-band PCS licenses in regions 1, 2, 4, 6 and 9 for $251.5 million, and 10-megahertz licenses in the remaining four regions for $20.7 million. There is a 7-work-day period during which bids are checked to determine if they conform to legal requirements, said Qualcomm spokeswoman Christine Trimble, after which time the company would comment on its plans in Mexico.
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Midicell also was awarded two 3.4-3.7 GHz licenses in each of the nine regions, for $45.3 million, as well as a B-band PCS license in region 7 for $9.5 million and 10-megahertz licenses in regions 2, 6 and 9 for $71.9 million. Midicell spent about $127.3 million on its licenses, including five fixed wireless licenses in the 400 MHz range for about $563,000.
Telmex, the dominant wireline carrier in Mexico, in which U.S. company SBC Communications Inc. holds a 10-percent ownership interest, won two 3.4-3.7 GHz licenses in each of the nine regions comprising a nationwide footprint for $50.7 million, as did Telefonia Inalambrica Del Norte, S.A. de C.V. (Telinor), which paid $52 million for its 18 licenses.
In 1996, Telinor was awarded the first concession to offer both local and long-distance services in direct competition with Telmex. Telinor plans to invest up to $250 million to build and launch fixed-wireless service by the end of the year, said Bell Canada International Inc., which has a 27-percent stake in the consortium, said BIA Consulting Inc.
Telcel (Dipsa), the B-band cellular carrier that previously enjoyed a nationwide monopoly, was excluded from bidding on the A-and B-band licenses in all nine regions. However, Dipsa was allowed to bid on the 10-megahertz D- and E-blocks, and won all nine D-block licenses for $159 million.
Iusacell paid $58 million for two 10-megahertz PCS licenses in regions 1 and 4, which include the U.S.-border regions of Monterrey and Tijuana, said Bell Atlantic Corp. The licenses are contiguous with Bell Atlantic’s PCS licenses in the southwestern United States. The licenses will allow Iusacell, which already serves 70 percent of the 94 million people in Mexico, to expand its wireless service to 81 percent of the population, said Bell Atlantic.