The number of Mexicans subscribing to the country’s growing range of MVNOs rose sharply in the final quarter of 2021, at the expense of the country’s three MNOs, according to the latest data from the Competitive Intelligence Unit (CIU) cited by the online media company Xataka Mexico. MVNOs exceeded 5 percent of the mobile market for the first time (5.1 percent) at the end of December after adding 1.7 million lines in total in Q4, up 117 percent on the year-earlier market share of 2.5 percent.

Telcel (America Movil) was the leading MNO, with additions of 1.2 million, up 3.5 percent, followed by AT&T, with 889,000, up 7.5 percent, while Movistar (Telefonica) lost 4.5 percent of its mobile lines. In percentage terms, Telcel continues to dominate the market with 60.8 percent of the total, followed by Movistar and AT&T with 18.7 percent and 15.4 percent, respectively.

The report added that economic uncertainty has promoted a recovery of Mexico’s prepaid sector, which climbed to 109.6 million at the end of December, equivalent to 82.8 percent of the country’s total, while postpaid lines ended the year at 22.8 million.

Tarifica’s Take

At 5.1 percent, the MVNO share of the Mexican mobile market is not in the same league as Europe, where shares of 10 percent or more are not uncommon. Generally speaking, Latin American countries have not had very vigorous virtual operator sectors. However, the growth rate of this market in Mexico is noteworthy. In the fourth quarter of 2021 alone, it added 1.7 million lines, and over the course of one year doubled its percentage of the national market.

The recent economic uncertainty in Mexico drove customers toward the prepaid sector and away from postpaid. This makes perfect sense in terms of consumers’ unwillingness to commit to contracts and fear of possibly exceeding budgets due to being unaware of the amount of their consumption of data and other services. The security of prepaying and the resulting elimination of the possibility of bill shock are comforting in times of financial stress.

It appears very likely that the same economic trends in Mexico that moved MNOs’ subscribers from postpaid to prepaid also moved some subscribers from MNOs to MVNOs. Given that the MVNO business model is built on prepaid service and budget pricing, virtual operators would be attractive to customers looking for more favorable financial terms for their mobile service.

Since they are now at the top of their game in Mexico, historically speaking, it would be beneficial for MVNOs to press their advantage and offer more than just price savings and no contracts. By targeting special interest groups and demographics such as youth, they could move well past the 5 percent mark and challenge the big MNOs even more. Provided they do not proliferate too fast and put each other out of business, MVNOs could be on the verge of a golden age in Mexico.