Telecommunications in 2022 and prospective for 2023

2022 is about to end and it has been a year of chiaroscuro both for the Mexican economy and for the telecommunications sector as a whole.

Although it is true that economic growth at the end of the year seems more encouraging, forecasting a rate of 2.8% in 2022 and 0.95% for 2023, according to the Survey on the Expectations of Specialists in Private Sector Economics carried out by Banco de México, the dynamism of economic activity is still below that registered in 2018.

In addition, the incessant inflation continues to reduce people’s purchasing power. The latter, coupled with the tightening of financial conditions, the persistent disruptions caused by the pandemic, and the recession of the world’s main economies, mainly the United States, predict a convoluted dynamic for 2023.

Telecommunications in 2022. In recent years, telecommunications have shown their resilience in the face of macroeconomic shocks and the public health crisis, with 2022 not being the difference. In the first three quarters of 2022, the growth of the telecommunications sector in Mexico reached an average of 4.0 percent.

Fixed connectivity (telephony and broadband) registers a growing adoption trend that accelerated at the beginning of the pandemic. This is due to the growing expansion of networks and the intensification of the use of fixed broadband to carry out educational, social, productive, and cultural activities, among others. Thus, as of September, there was an average growth of 4.2% in accesses to telephony and 6.9% in those of fixed broadband.

For their part, the convergent communications companies (restricted television, telephony and internet) scaled their income accounting, averaging as a whole an annual growth of 6.0 percent. All of this is attributable to the improvement of its services, both in terms of Internet download capacity and access to content and entertainment platforms through the Internet.

Meanwhile, the mobile telecommunications market in Mexico reached an average annual growth of 5.3%, in terms of revenue. In its breakdown by components, a contraction of -8.1% was registered due to the sale of mobile devices, which was offset and surpassed with the increase of 11.5% due to the provision of services.

Based on the previous trajectories and the projection of better economic activity at the end of the year, a growth forecast of between 4.2% and 4.6% is projected for the telecommunications sector in Mexico, with a central value of 4.4%, similar to the registered during 2021.

Expectations for 2023. It is forecast that the incessant evolution in the consumption of voice minutes, channels and contracted content, but above all the expansion in fixed and mobile connectivity, together with the growing deployment and development of new generation networks and the innovation in the offer of services, result in a growth of the telecommunications sector of 3.4% during 2023.

An additional factor that could act as a catalyst for the sector or an obstacle to this dynamism are regulatory decisions. Next year anticipates the third revision to the asymmetric regulation of preponderance, spectrum tenders for 5G optical bands, as well as the constitution of the National Infrastructure Information System (SNII). All these elements should promote a more competitive ecosystem and a balance in the market conditions between operators that allow for effectively navigating the economic adversities that are predicted.

@ernestopiedras