Dogged by the collapse in oil prices, the Mexican government’s plans to raise the level of global involvement in its petroleum sector have yet to live up to expectations. But that does not mean other sectors of the economy aren’t drawing attention from foreign companies.
The Dallas Morning News reports on AT&T’s expansion into Mexico, where the U.S. telecommunications giant acquired two wireless carriers earlier this year in deals worth $4.4 billion. It plans to invest another $3 billion to set up a 4G network covering an area of 100 million potential customers.
AT&T’s effort is driven by several factors worth noting:
- The success of the Mexican government’s economic reform efforts, including breaking up traditional monopolies, attracting more foreign investment, and making the business environment more competitive. The newspaper quotes one expert as saying, “AT&T’s moves are the clearest evidence of success in Mexico’s reforms, and it’s hard to overstate the importance.”
- The fast-growing middle class in Mexico and the Latino community in the United States which make frequent wireless calls to both sides of the border. AT&T is betting they embrace a seamless system with a single data plan that carries no international roaming charges.
- A business community on both sides of the border that is becoming more integrated as trade expands.
- An undeveloped mobile internet market that seems poised for big growth. As AT&T’s CEO states, “… you are going to see the mobile Internet revolution take off in Mexico. We intend to ride that wave.” The head of At&T’s Mexico unit earlier said the same thing: “The mobile internet in the United States created an engine of economic growth, and we believe it will do the same here in Mexico.”
According to the Mexican government, the telecommunications sector has attracted 13 percent of Mexico’s foreign direct investment since market reforms were passed in June 2013. A senior official noted recently that the sector since then has expanded twice as fast as the Mexican economy as a whole.
Speaking of the reforms process ….
The World Bank’s new “Ease of Doing Business” index slots Mexico as Latin America’s best locale for businesses and entrepreneurs, and notes it is leading the way for the region in implementing pro-business reforms.
Mexico is now on the global e-commerce radar
Amazon launched full retail operations in Mexico this past summer, its first major foray into Latin America. One large attraction, as the head of the company’s Mexico unit highlights, is that “more and more young people with digital mindsets are entering the economy.”
eMarketer, a market research company, estimates that online retail sales, excluding travel and event tickets, are growing 30 percent to $5.7 billion this year, and that
15 million more Mexicans will gain Internet access by 2018. And the Swiss banking group Credit Suisse believes the growth of the ecommerce sector in Mexico will outpace Latin America as a whole.
Curated by Alma Velazquez, Geoskope Junior Associate for Mexico