Mexico’s MVNOs Face a New Threat: The State’s Shift From Wholesale to Retail

Mexico’s telecommunications market is undergoing a significant transformation, one that could reshape the future of mobile connectivity and threaten the very companies that have made it more affordable.

The recent merger of assets between Altán Redes and the state-owned Federal Electricity Commission (CFE) has changed the game, turning a neutral network partner into a direct rival.

For years, Mobile Virtual Network Operators (MVNOs) have been a force for competition in Mexico.

These operators, which include major players like Walmart’s Bait, don’t own their own cell towers. Instead, they lease access to Altán’s wholesale network, known as the Red Compartida.

This national wholesale network was a government initiative designed to address the lack of competition and the high prices that long plagued the Mexican telecom market.

Red Compartida is seen as a “lighthouse project” for other countries struggling with a similar lack of competition, offering a model where a government-backed wholesale network could open the door for smaller players to enter the market and provide affordable services.

This business model allowed them to offer extremely affordable plans with generous data allowances, and it was a mutually beneficial relationship: Altán got a steady stream of revenue, and MVNOs brought affordable connectivity to millions.

But a new strategic direction by the government, according to Expansion, is poised to upend this dynamic.

The CFE, which now has operational and commercial control of the Red Compartida, is no longer content to simply provide infrastructure. The state-owned company is now actively seeking to sell mobile phone services directly to consumers. This decision makes the CFE a direct competitor to the same MVNOs that rely on its network for their existence.

The concerns over this shift are already materializing. The Federal Telecommunications Institute (IFT), the country’s regulator, has warned of potential anti-competitive behavior.

With the CFE controlling Altán, there is a risk of a direct exchange of information on prices and service quality. This could give the state-owned company an unfair advantage, allowing it to offer services identical to—or even better than—what MVNOs can provide.

The impact is already being felt. In recent months, Altán has made moves that have directly affected its partners. It has increased its wholesale prices by up to 20% and reduced the amount of data it delivers to MVNOs by 35%.

This forced operators like Bait to halve the data offered in some of their most popular plans, eroding the very value proposition that has made them successful.

While the president of the Mexican Association of Mobile Virtual Operators (AMOMVAC) has noted that major disconnections have been limited, she warns that if the state continues to act as a direct competitor, the long-term effects on MVNOs will be severe.

The very existence of these companies, which have successfully brought connectivity to the underserved, is now at risk.

The MVNOs believe there is a better way forward. They argue that the CFE should stick to a wholesale model, focusing on expanding and maintaining the Red Compartida network. They can then let MVNOs handle the retail business, including sales and, critically, customer service.

AMOMVAC points to the CFE’s poor track record with customer service and its significant financial losses from previous telecom efforts. They argue that the state should not repeat past mistakes.

For a country where millions still lack internet access, this is a critical moment.

The government has a noble goal of reducing the digital divide. But by trying to become a retail provider, it risks undermining the very players who have been most successful in bringing affordable services to the public.

Ultimately, the question remains: will the CFE learn from its mistakes and collaborate, or will it forge ahead, potentially tripping over the same stones that have already cost it billions of pesos?