Telefónica—operating in Mexico as Movistar—is discussing the possibility of renting mobile phone towers from Telesites, the recently spun-off towers business of América Móvil, according to unnamed sources cited by Bloomberg. Its aim in doing so would be to gain access to Mexico’s most widespread network of around 10,800 towers, enabling it to offer faster services and lowering the costs of improving coverage, according to the sources. Telefónica’s chief operating officer, Jose Maria Alvarez-Pallete, recently said the company was prepared to reach network sharing deals with rivals such as AT&T (which owns Iusacell and Nextel) and América Móvil in order to boost its performance in Mexico.
Last year, América Móvil, having been declared “dominant” by the Mexican regulator, agreed to sell off assets in order to bring its share of the mobile market under 50 percent. Spinning off its tower business into a new entity, Telesites, will not in and of itself accomplish the goal of reducing dominance. In April, CEO Daniel Hajj said, “We are interested in divesting and reducing our market share but we do not know exactly how we want to do it.” In the meantime, renting out some of its very substantial infrastructure is a way for América Móvil to drive revenue while waiting to see how the rapidly changing Mexican market will shake out. As for Telefónica, Alvarez-Pallete said last week, “We can’t intend to grow in Mexico without having a good network and we are light-years away from it. So, what has to be expected from us in Mexico is strong investments, and potentially agreements to access towers or for combined creation of infrastructure.” Sharing of network resources among rival operators has often been shown to be a win-win situation, and in the Mexican market, where there is a great to need to improve coverage over vast areas, sharing is particularly desirable. AT&T, in its quest to become the first cross-border service provider in North America, is also reportedly working on an agreement to rent towers from Telesites.