Mexico’s Federal Telecommunication Institute (IFT) unanimously approved the financing plan set forth by telecommunications company Altán Redes proposing a public-private partnership between Mexican Development Banks and Altán. The announcement comes as Altán Redes declared bankruptcy, triggering the Andres Manuel López Obrador (AMLO) administration to intervene and rescue the company.
The regulator indicated that the transaction does not modify the wholesale network sharing modality. This is relevant since Altán Redes‘ Shared Network (Red Compartida) program focused on wholesale services. The company started as a public-private partnership with costs being entirely borne by private entities, including Morgan Stanley, the China-Mexico Fund, IMF, and the Caisse de Dépôt et placement de Québec (CDPQ), amongst others. Also, obligations are maintained to ensure competitive neutrality and avoid influence from other telecommunications service providers.
AMLO’s intervention surprised many. In the past, airline companies such as Interjet and Grupo Radio Centro requested support from development banks to clear their liabilities but the President has energetically rejected said offers, stating that his government would not bail out any company.
But what is different this time? The rescue would allow the AMLO administration to comply with a key campaign promise: take Internet to the country’s most remote areas through the ‘Internet for All’ (Internet para Todos) program. The official goal for 2024 regarding broadband access is 95%, while for Internet access, it is 77.2%. Red Compartida has a coverage close to 70%, aiming for 92.2% by 2028; however, it has also been used to provide access at remote locations.
This decision comes as the Federal Electricity Commission unveiled investments for the ‘Internet for Everyone’ program, which could be seen as the government’s effort toward increasing connectivity and Internet access.
The government contributed a third of the financing through its development banks (Nafin, Bancomext, and Banobras), which fall under the purview of the Ministry of Finance (Secretaría de Hacienda). Recently, the Minister of Finance appointed a new Chairman and Director of Altán.