A group backed by the Morgan Stanley Investment Bank has won a 20-year contract from the Mexican government to build an open-access wholesale wireless network that will cover 112 million people.
Red Compartida – “shared network” – will cover 92.2% of the population of Mexico using 4G LTE technology on the 700MHz bank. It is believed to be the world’s largest open access wholesale network yet created.
Eugenio Galdón, who has headed the Altán Consortium as chairman of strategic partner Multitel, said: “Everyone in the Consortium is rightfully proud at being entrusted this project, and are fully committed to fulfil Red Compartida’s mission to close the digital gap and to provide efficient network access to all Mexicans.”
Mexico decided to create Red Compartida in order to offer competition to the dominant América Móvil, controlled by businessman Carlos Slim.
But Declan Ganley, the Irish businessman whose Rivada Networks project was excluded from the Red Compartida bidding only days before the decision, complained that “people of Mexico are being given a raw deal”, because “Rivada’s coverage plan is significantly higher than only opened bid”.
He added: “The cost of awarding Red Compartida without competition can be measured in millions of Mexicans left uncovered by the one bid just opened.”
Rivada was excluded last week when the Secretariat of Communications and Transport said its bid was invalid because it did not include a bond for one billion pesos ($49 million). Rivada said the money had been provided, but under separate cover, and is threatening to contest the decision in the courts.
The Altán Consortium said it will be responsible for the design, installation, operation and upkeep of the wholesale mobile broadband network. The Red Compartida will be built through a public-private partnership that is expected to generate investment in excess of $7 billion over the life of the concession.
“This has been a very demanding and transparent tender process, in which Altán proved that it had the most solid and trustworthy bid, surpassing all the minimum requirements by a wide margin,” said Galdón.
“Now it is time to draw upon our technical and management expertise to give life to the project. We have the required industry experience, as well as the necessary financial and operational muscle. … Red Compartida will soon be a reality that will positively impact the daily lives of millions of Mexicans.”
Red Compartida is expected to start operations on 31 March 2018.
The project’s largest investor is Marapendi Holding, ultimately backed by Morgan Stanley Infrastructure, with a stake of 33.38%.
The next largest shareholder is the China Mexico Fund (CMF), with a participation of 23.36%. This is a fund specifically created to invest in and finance infrastructure projects in Mexico. Its role clearly hints that much of the business associated with Red Compartida may go to Chinese equipment companies, specifically Huawei and ZTE.
But Altán has a range of other backers, including the International Finance Corporation (IFC), a member of the World Bank group that finances private sector ventures. Its participation is 3.34%, but IFC also manages the CMF.
Telecom companies Axtel and Megacable also hold a stake in Altán through a series of non-voting shares and without involvement in management. Each has a participation of 4.01%.
Chris Koski, global head of investment strategy for Morgan Stanley Infrastructure, said: “We are excited to be building the world’s largest open access, wholesale telecom network alongside our Mexican and international partners. We are committed to ensuring that Red Compartida provides bestinclass service and coverage.”