Image courtesy of sakhorn38 at FreeDigitalPhotos.net

There is a huge opportunity for entrepreneurs targeting the mobile market in Mexico today. The Mexican government enacted a key reform of the regulatory environment for the telecom sector in June 2013. This was a long awaited change. The telecom sector has been and still is controlled by one dominant company – America Movil, which controls 80% of fixed lines and 70% of mobile lines in the country. America Movil is controlled by Mr. Slim, who is always in the top three richest persons in the world. When Mexico is in position #67 in GDP per capita according to the World Bank.

This quasi “monopoly” has had perverse consequences for Mexico. The OECD estimates that 1.8% of GDP is lost every year due to this concentration. Telecom services have low penetration and higher prices than almost all other countries in the OECD.

America Movil controls 67% of the revenues of the sector, but invests only 33% of the total investment dollars. Another shocking statistic is that it only invests $10 dollars per user in Mexico, while it invests around $44 dollars per user in other Latin American countries including Brazil where it also operates. It takes advantage of their dominant position in Mexico to underinvest.

The good news is that the reform enacted will reduce the dominancy of America Movil and incentivize competition in the sector. Mobile penetration should increase and prices should decrease. 4G deployment should increase. Also broadband speed should increase from current relatively slow levels.

Despite this concentration the penetration of smartphones has been growing rapidly. It is a misconception to think that smartphone penetration is low. Most of the Internet companies I talk with in Mexico receive 50%-60% of their traffic from mobile devices already. Most web companies should be developing responsive design sites (an approach to design websites that provide an optimal viewing experience – easy reading and navigation with a minimum of resizing, panning, and scrolling – across a wide range of devices) and some should be thinking about developing their own apps to provide an even better user experience.

Mexico has 102 million mobile lines – an 85.4% penetration of total population – at the third quarter of 2014. 43% have a smartphone; that is 44 million people. However only 49% have a data plan; the rest uses Wi-Fi for internet and data access. The following chart shows the amazing evolution of smartphone penetration in the last six years:

Source: The Competitive Intelligence Unit S.C.

The ciu estimates that 7 out of 10 mobile lines will have a smartphone at the end of 2015. That is a huge opportunity for all entrepreneurs – a growing market of Internet users that will have more frequent access and also fastest access.

The positive changes generated by the reforms will create more opportunities as the market of mobile users will increase even more rapidly. The opportunity for mobile entrepreneurs developing tailored products is huge in Mexico.