AMLO Proposes Huge Market Push for State-Owned Internet Company

Mexican president Andrés Manuel López Obrador (AMLO) is proposing a much bigger role for the government in Mexico’s Internet industry.

AMLO proposed a bill that woull allow State-owned operator, CFE Telecomunicaciones e Internet para Todos (CFE TEIT), to offer low-cost Internet access nationwide, without restrictions.

CFE TEIT (an offshoot of Mexico’s public electricity company, CFE) was created in 2019 with the specific goal of improving digital connectivity in Mexico, particularly in rural areas. Under those terms, CFE TEIT wasn’t allowed to deploy service in areas widely covered by private operators.

AMLO’s proposal would remove the restrictions put on CFE TEIT, allowing the public company to compete directly in a market dominated by private firms.

It must be noted that CFE TEIT has direct government support and is expected to essentially pay no fees for using Mexico’s radio spectrum, which is one of the heaviest expenses for telecom operators in the country.

It could be argued that such advantages could give CFE TEIT a monopolistic edge over the rest of the market. The proposal (which has been greenlit by federal legislative commissions) makes sure, however, to point out that “Internet services provided by the State shall not be classified as a monopoly because they guarantee the right to access information and communication technologies, including broadband Internet.”

The bill has caused alarm among market analysts. Many expect that, if implemented, it would generate major distortions in Mexico’s telecom landscape. The country’s main operators, like América Movil and AT&T, would be among the hardest hit by the bill.

CFE TEIT received a 24.2% budget increase this year, amounting to approximately US$770 million. However, the company remains unprofitable, reporting losses of around US$508 million in 2023. While it added 150,000 new users, it remains far from its goal of reaching 1 million customers by 2025.

AMLO’s Internet proposal, while concerning for the market, is not surprising at all. Since he began his administration, the Mexican president has been very agressive in his campaign to gurantee market dominance of State-owned companies in several industries. His most notable attempts have taken place in the energy sector.

AMLO is just days away from leaving office. His successor, Claudia Sheinbaum, will oficially take charge on October 1. The current president has used the last months of his administration to fast track a package of very controversial constitutional reforms, including a almost complete makeover of Mexico’s judicial system and a total incorporation of the country’s National Guard into the armed forces.