On February 7, 2018 the Mexican telecom regulator (Instituto Federal de Telecomunicaciones or "IFT") approved the issuance of the call for bids and bid bases for the award of a twenty year concession of 120 MHz of the available spectrum in the 2500-2690 MHz frequency band for wireless services further identified as auction number IFT-7(the "Auction"). The Auction resolution and bid rules ("Bid Rules") were subsequently posted in the IFT webpage, and published in the Official Daily on February 13.
Timeline. Phase 1: filing of expression of interest and of questions related to the Bid Rules by would be participants, until March 2, 2018; publication in the IFT webpage of Q&A, through March 20, 2018; filing of documentation by applicants (including a bid participation guarantee) and of supplementary information from March 21 to June 1, 2018. Phase 2: certification of participants by IFT, through July 13, 2018. Phase 3: preparation and submission of bids, beginning on July 31 through August 6, 2018. Phase 4: award, twenty business days after the publication of the bid process results and thereafter a calendar of activities related to the formalization of the award and conclusion of the Auction process towards the end of 2018.
Qualification of Participants. Pursuant to the Bid Rules no telecom player is excluded ab-initio. The antitrust unit of the IFT will determine if a participant's directly or indirectly held spectrum (considered as an "economic interest group") exceeds the maximum specified in Appendix B of the Bid Rules.
Coverage Obligations. The provision of wireless services with 3G or higher technology; a 4 year window to provide services in at least 200 of the 557 areas identified as lacking wireless services and to at least five special economic development areas; and the deployment of infrastructure and offer services in at least 10 of 13 metropolitan areas within 3 years from the date of the award.
Initial Minimum Reference Value and Auction Participation Guarantee: The minimum reference value is identified as Mex$350,000,000, and a participation guarantee of Mex$700,000,000 via a stand-by letter of credit.
It is expected that during Phase 1 interested participants will express concerns regarding the overall economics of the Auction, specifically the breadth and scope of the coverage obligations, with a view towards obtaining possible comparable relief via the amendment of the Bid Rules which can occur up until the conclusion of Phase 2 and in extraordinary circumstances thereafter provided the participants would have the right to withdraw from the process without penalty. Last year America Movil obtained clearance from the IFT to acquire 60 MHz free from equivalent coverage obligations.
The Auction and Bid Rules materials may be consulted at http://www.ift.org.mx/industria/espectro-radioelectrico/telecomunicaciones/2018/licitacion-no-ift-7-servicio-de-acceso-inalambrico