Virtual mobile flourishes in Mexico, but there is low interest in buying spectrum

As of Q1 2023, MVNOs accounted for almost 8% of Mexico's mobile access, which made the Mexican MVNO market the largest in the region. This segment is experiencing accelerated growth and has tripled in size since 2021. Although there is a multitude of mobile virtual players in Mexico, three layers with different interests can be recognized: we count first the "pure" MVNOs specialized in specific segments, then those linked to telecommunications companies, and finally the services linked to retail companies. The paradox is that while the virtual business is flourishing, the physical network business is going through a period of uncertainty. Due to the high costs of spectrum operation, there is little interest in the auctions, and, even worse, some operators who don’t renew their licence. The "pure" MVNOs were the first to appear and have been oriented to find specific audiences: young people, women, migrants, savers, etc. They are the largest segment in terms of number of players and account for 25% of lines within the virtual segment. Virgin Mobile is the largest company in this profile group, with almost a third of the customers. It has regional projection, its main market in the region is in Colombia, with 2.5 million lines, and it also has a small operation in Chile. In Mexico, some MVNOs were also created in order to deploy a one-stop-shop offer. They are the mobile leg that complements fixed service packages. Dish Mexico, Megacable, Star TV, and Televisa are the main drivers of the category. This MVNO model gathers another 25% of the country's virtual lines. The segment doesn’t grow so fast and the key could be found in the competition structure. One of the distinctive features of the Mexican market is that América Móvil is the only player with a significant presence in both mobile and fixed worlds. Its two rivals in the mobile business, AT&T and Movistar (Telefónica), do not have a firm presence in the fixed world. It indicates that the competition with bundles is not a strong topic in the market. The revolution of the retailers The real phenomenon of MVNOs came from retailers. By Q1 2023, this universe already accounted for more than 50% of mobile virtual customers. Retailer MVNOs have a common feature: they can already count on multiple points of sale for SIMs, a key element in an environment with dozens of competitors. But, that is just the tip of the iceberg. Retailers placed themselves at the center of the value chain: offering connectivity is an irresistible opportunity to boost other businesses. That is why they offer Mbps at almost no cost through loyalty plans, because the key element is the data obtained from their mobile users to...