the objective of Altán Redes is social coverage, not to enter the mass market

Megacable Holdingsthe third fixed telephone and Internet operator and the second provider of restricted television nationwide in Mexico by volume of users in 2021, moved away from the government position of allowing a modification to the concession title of the company Altán Redes, which is of wholesale character, so that it will soon be allowed to market its services directly to the final consumer in the mass market and thereby also become a new competitor for the rest of the private companies that participate in the telecommunications sector.

For the cable company Megacable, which is also a shareholder, provider and creditor of Arbor Redes, the entry of that company into the retail telecommunications business could generate market distortions as Altán Redes is today a company run by the federal government and managed with public money; and it would also violate its mission of bringing social coverage to unprotected regions by trying to market its products in more profitable markets such as urban areas at the same time as in rural areas.

“That he let us do what we know how to do; that is, why Altán is going to invest (in retail deployment)”, said company executives.

The current directive of Altán Redes, extracted a few months ago from different federal agencies, proposes that this public-private company obtain regulatory authorization to directly market its mobile and fixed wireless services in regions not served or poorly served by other companies in the private initiative.

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This authorization could allow Altán Redes to raise resources more quickly to reach the financial breakeven point, since the current economic and regulatory context that the Mexican telecommunications sector is experiencing forced the company to take advantage of the commercial bankruptcy, this due to the lack of a greater volume of users through virtual mobile operators that justify their existence and the deployment of investments for the construction of infrastructure.

On the shared network of wholesale services of Altán Redes, about seven million subscribers are served to date and its coverage with 4.5G technology is present for 80.1 million Mexicans. One of the approaches of the year 2016, when Altán won the concession for this telecommunications network, indicated that for this year the company would have about 11 million users served through virtual mobile operators, but then the pandemic of coronavirus and its negative impacts on the Mexican economy, nor that the other cellular operators would disdain Altán’s network to focus on building their own 4G-LTE and 5G networks.

Due to this diagnosis, Altán Redes announced in July that it was evaluating requesting regulatory authorization to sell directly to the final consumer, and almost at the same time the federal government, through the development bank (Nafin/Banobras/Bancomext), entered the company with a new injection of capital for 161 million dollars, while providers such as Megacable participated with an injection of 166 million dollars, plus 50.5 million dollars injected mainly by the company’s shareholders.

Megacable Holdings welcomes the fact that the new management of Altán Redes, made up of public officials, tries to be innovative in order to more quickly recover the public money injected into the company and recommended, if that were the scenario, to provide exclusively retail services in those locations where there are no cable distributors. services, but also recalled that Telecomunicaciones de México (Telecomm) already has a concession from which Altán Redes could disperse its services in such locations.

“It was a success that the government has entered to lend money. What the government did was lend money; the government is not the owner of the Altán, right now it has certain governance clauses, because it lent money. If the rescue is successful, which we think it will be, that money will return to the government. He is going to be paid and with interest (…) Having appointed a financier like Carlos Lerma… if the problem was financial, his appointment is a success and Carlos was also successful in hiring good technical advisors, I think that will work ” , spoke Enrique Yamuni, general director of Megacable Holdings, regarding Altán’s plans to sell direct to the final consumer.

The federal government had its coverage commitments with this APP before it (Altán) went to bankruptcy; I had made an arrangement with Promtel to change its deployments, from now on I am going to go to more unprotected areas, which I had at the end. And yes, it is important, because they were areas that did have a cellular service, but very poor in network, with 2G or in the best of cases with 3G. That is going to help (…) Go direct, I think not; I think it will work better with more distributors”, said the head of Megacable.

Altán Redes owes around 190 million pesos to Megacable Holdings and recently reached agreements to pay the payments to its creditors, to whom it owes in its entirety about 30,000 million pesos recognized by the bankruptcy conciliator.

The company published in the last days of last September its bankruptcy agreement proposal and the form and terms in which it would pay its commitments with all its creditors. Now it would be up to the First Specialized Court in Bankruptcy to proceed to the next stage of the Altán commercial bankruptcy.

Meanwhile, the cable company Megacable recommends Altán not to sell directly to the final consumer:

“Altán is precisely that: someone who has those frequencies (700 MHz), but that management that he wants and that technique is what we have and that he let us do what we know how to do; In other words, why is Altán going to invest and be better than all the distributors that are developing the concept of virtual mobile operator? Because the great advantage we have is that we can create a synergy between mobile, mobile and landline data (…) If Altán were to sell directly, I no longer want to see how a company that was in commercial bankruptcy, because it has a social purpose of coverage , to be able to go out, do not dedicate yourself to covering them (rural areas)”, said Raymundo Fernández, deputy general director of Megacable.