Looking to counter Carlos Slim’s telecommunications giant América Móvil, Mexican operator Grupo Iusacell and Telefónica said they will enter a network sharing deal. Details of the agreement haven’t been announced yet, but it is expected the companies will share wireless towers and fiber-optic cables. moves designed to cut operating costs.
RCR Wireless News syndication partner Signals Telecom noted in a report that the agreement increases exponentially Iusacell geographical coverage in the Mexican market, providing an immediate footprint in rural areas outside of its historical focus on urban centers. Also, the agreement is expected to include access to a nationwide fiber optic backbone with what are expected to be preferential rates. This is expected to provide an important benefit to Telefónica’s Movistar Mexico as it looks to increase the number of fiber optic links directly connected to base stations as part of the expansion of its LTE network.
According to Signals Telecom, the benefit for Movistar Mexico will include additional income from the Mexican market through the use of its network to serve new customers. The operator is also expected to benefit from cost reductions and investments in network deployment.
“International experience indicates that Telefónica has an open policy in terms of reaching agreements with other market participants. The roaming agreement with Iusacell will not be the first,” Signals Telecom noted.
From Iusacell’s perspective, the immediate benefit is to expand the geographic area of its service, which will allow for the potential expansion of its customer base and accelerate its growth in the market. The operator can also enhance the marketing of its Unefon brand in areas where it was previously not available.
Signals Telecom did note that the benefits of the agreement might only be enjoyed by people in rural areas of the country if Iusacell decides to market services in these areas. Iusacell would have to invest in advertising, distribution logistics and the establishment of retail outlets of its various mobile devices. Otherwise, the benefit derived from this agreement for Grupo Iusacell will be limited to improving its offerings to existing customers.