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Pay TV needs more players, but not Slim: what about the business?

Pay television maintains its importance in Mexico despite the arrival of streaming platforms, not only because audiovisual content is one of the products most consumed by users, but also because of its importance in the strategy of telecommunications operators to create new service packages that allow them to add more subscribers.

In fact, Claro TV, owned by Carlos Slim, has been ambitious to enter this segment for more than a decade in order to achieve convergence, that is, bundle pay television into its services.

“In Mexico we still have a significant digital gap and that makes restricted television a more viable option for users, added to the packaging offered by many companies, and this is what América Móvil wants to do,” explains Michel Hernández Tafoya, general director from Observatel.

But, for the moment, this ambition remains on hold. Last week, the Federal Telecommunications Institute (IFT) decided that Claro TV should wait to create a new project to analyze whether it should be allowed to enter this market, which is highly concentrated.

According to data from the telecommunications regulatory body, as of December 2020, Grupo Televisa has a 63.9% share of the restricted television market, while Megacable has 16.6%, Dish 9.7% and Totalplay 7.9%.

In addition, there are two specific operators with substantial power: Megacable and Televisa, by concentrating specific markets in the national territory.

Given this scenario, the analysts consulted point out that the entry of a new player in the segment is necessary to help balance the market and reduce the prices of this service for consumers, but the arrival of Claro TV would not have this effect.

“If the bet is that the other actor that also concentrates telecommunications services participates and, not only that, it also has a very important participation in the audiovisual through its aggregation services with its Claro TV brand, far from helping the deconcentration there is a risk that their concentration will be further strengthened,” warns Elena Estavillo, former IFT commissioner.

In order to achieve balanced competition, the specialist believes, it is necessary to analyze the segment together with the entire telecommunications ecosystem and create schemes for the entry of new competitors. And, furthermore, make both Televisa and América Móvil comply with the preponderance measures assigned to them.

“We need to enable the entire environment for new players to enter or for the small ones that are already in the market to have the opportunity to grow. We should be very concerned about why other niche operators, international, national, cannot grow, no model has been able to help balance these markets”, he warns.

What would Carlos Slim’s pay television look like?

Claro TV would be the one that would offer the pay television service in Mexico and would do so through its Star One satellite signal, so its transmission would reach remote areas.

In addition, through fiber optics it would reach cities where its infrastructure is deployed. Carlos Slim Domit, president of the board of directors of América Móvil, explained last week that if it manages to enter this segment, the company will invest 8,000 million pesos to increase its fiber in areas where it does not yet have a presence.

According to IFT data from December 2020, 54.4% of Mexicans who have a pay TV subscription have it through a satellite signal offered by Dish and Sky, while the rest watch restricted TV channels to through the fiber optics offered by Totalplay or Izzi.

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