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More Competitive Telecom and Transport Sector
The Ministry of Transport and Telecommunications (SCT) , headed by Carlos Ruiz Sacristan, has had its hands full this term, since most privatizations over the past six years have occurred under its jurisdiction. The nation's 83 airports were divided up by geographic regions, and concessions went to the highest bidder.
Each foreign consortium was offered the operating concession along with a 15% ownership stake, with the option to buy an additional 5%. The Aeropuertos del Sureste (Southeast) package was the first to take off, with a consortium comprised by Mexican construction company Tribasa , Copenhagen Airports, GTM of France and Spain's Cintra winning the bid with a $116 million offering. Last July, the Pacific airports concession also got off the ground, going for $260 million to a consortium of Spanish and Mexican companies called Aena Servicios Aeronauticos. Aeropuertos del Noroeste (Northeast) are next up on the auction block, but the juiciest deal is yet to come. The nation's largest international airport, and the most important in Latin America - the Mexico City terminal - is still to be sold. The Ministry says it expects all airport privatization to be completed by the end of Zedillo's term, this December. The capital city is also planning to build a second airport to serve the central location, due to a large increase in international demand that the main airport cannot accommodate, which would be controlled by a consortium as well.
Mexico's two major airlines, Aeromexico and Mexicana , with two-thirds of market share, will look forward to increasing flights at the central hub. Both have strategic alliances with major international airlines, thereby ensuring international standards are implemented. Aeromexico was even named the most punctual airline in the world, the company Chairman, Alfonso Pasquel confidently assures.
The most intensive periods of railroad privatization took place between 1997 and 1999, while seaports were opened to private investors during the Salinas administration. Privatization raked in $45 million in upgrades for the Pacific-North Railway, while the Northeast Railway, connecting Mexico City to Laredo, Texas received a $230 million boost. Passing ports into private management has also meant that Mexico's busiest ports, Veracruz and Manzanillo, have received broad improvements. With the nation's extensive network of land and sea transportation in the hands of private investors - after years of stagnation under public administration - a competitive modernization is finally kicking in. And with good timing, since sea and rail transport is sure to accommodate the logistics needs that will arise with an expected increase in trade with Europe.
Meanwhile, the Transport and Telecommunications Ministry purports that the telecom industry still holds much in store for future aperture. Tele-density averages about nine lines per 100 inhabitants, and wireless users increased to 7.6 million by end-1999 from 3.4 million in 1998, assuring competitors that there is market to be had. Wireless phone frequencies for local service went on the market in 1999, and newcomers like Maxcom, Unefon, Axtel and Pegaso are still jumping on the bandwagon. Long-distance carrier Alestra is 49% owned by AT&T Corp., 25.4% owned by industrial conglomerate Alfa , and Grupo Financiero Bancomer S.A. owns the remainder. A local telephone carrier, Pegaso made a strong entrance into the market, and captured the attention of multinationals like Sprint, which recently invested $200 million in the company in a deal that will allow Sprint's wireless unit and Pegaso's customers to all have roaming services in major cities across the U.S. and Mexico.
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Local media giant Televisa, high-flying tech company Qualcomm and U.S. telecom company Leap Wireless International already own minority shares in Pegaso. But new competitors have run into their fair share of obstacles, as the opening market infringes on Mexican billionaire Carlos Slim's long-ruling phone empire, Telmex. Telmex is the dominant local, long-distance, and cellular operator, and still controls hook-up distance that competitors need. Competitors claim Telmex continues to hold an unfair advantage on the market by refusing to provide connection services or proffering tardy service. Lawsuits have been filed with the U.S. Federal Telecommunications Commission, which fined Telmex $100,000 in a ruling last year. Mexico's Federal Telecommunications Commission (Cofetel) has also issued statements saying it considers Telmex to be a monopoly, but has not been able to do much to rein in Telmex's dominance. Slim's holdings are immense, as CEO of Telmex, whose shares are the anchor of the Mexican Stock Exchange, and CEO of national leading conglomerate Grupo Carso , among others. With net assets estimated to be worth $12.5 billion, following his recent purchase of a CompUSA stake, Slim is considered to be the wealthiest man in Latin America. His name will soon become a household word in the Spanish-speaking world, after the March announcement that Telmex was partnering up with Bill Gates' Microsoft to form the largest, most comprehensive Web portal in Spanish, T1msn.com. And it's no doubt that Gates picked the right company, since Telmex's lines reach into Central America, with the potential to move beyond.
Media
Telmex is not the only major player to announce a Web portal launch. Emilio Azcarraga Jean's media giant Televisa , which not long ago had a monopoly on the television industry, has also forayed into the Internet. Televisa possesses a rainbow of media tools, from its television stronghold, to positions in radio, magazines and music labels. Its only competitor in the television market, TV Azteca , is no small fish either. Though it only broke into the market in the last decade, when deregulation set in, it serves up tough competition for Televisa, with good ratings, and innovative advertising packages, based on its ratings. TV Azteca is only one of the many pools where CEO and President Ricardo Salinas Pliego dabbles his fingers, and its success is proof of his keen business sense. Salinas Pliego (a distant cousin of ex-President Carlos Salinas) also has pleased investors with his risky but pioneering ventures into Unefon, and retailer Elektra . |
MEXICO
