On February 8 2018 the Federal Institute of Telecommunications (IFT) announced the auction of the 2.5 GHz band. The auction's purpose is to assign the commercial use and exploitation of 120 MHz of the 2,500 to 2,690 MHz band for the provision of wireless services. The band has been divided as follows:

  • four frequency division duplex blocks (10 MHz each); and
  • two time division duplex blocks (20 MHz each).

The other 60 MHz were acquired in 2017 by the preponderant agent, Telcel (America Movil), in the secondary market to Grupo MVS.

The minimum reference value for entering the auction is approximately $19 million for each 20 MHz block. In addition, the winner must pay government duties for the use of the spectrum.

The 2.5 GHz auction provides the following incentives to new competitors that do not have a spectrum in the PCS, AWS or 2.5 GHz bands:

  • 30% more of the points during the tendering procedure; and
  • changing the beginning of the concession's validity for a maximum of two years.

Although spectrum caps apply for existing carriers, Telcel will be allowed to participate in the auction if all of the blocks are not allocated in the first stage, although it will be able to bid on only one block (20 MHz).

New coverage commitment obligations that have not typically been included in recent spectrum auctions have been imposed on the winners of the 2.5 GHz auction. Such winners must:

  • cover at least 200 communities that have no mobile services with 3G or a superior technology;
  • offer services in communities that are within the five special economic zones; and
  • cover 80% of the population of certain metropolitan zones.

Four companies and one consortium are interested in formally participating in the auction process. They have already submitted questions, which the IFT recently answered.

The next phase will be the delivery of documents to formally participate in the auction. The auction is expected to be completed by November 2018.

For further information on this topic please contact Federico Hernández Arroyo at Hogan Lovells BSTL by telephone (+52 55 5091 0000) or email (federico.hernandez@hoganlovells.com). The Hogan Lovells website can be accessed at www.hoganlovells.com.

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