(Adds comment on profitability in paragraph 6)
By Christine Murray and Tomás Sarmiento
MEXICO CITY, May 26 (Reuters) - Mexico has cut the estimated investment required for a wholesale mobile broadband network by almost a third to $7 billion and is considering changes to make it more attractive to wireless operators, a senior government official said on Tuesday.
The network, which will have exclusive use of 90 MHz of the 700 MHz band of spectrum, was written into Mexico’s constitution in 2013 as part of a sector overhaul designed to curb the dominance of billionaire Carlos Slim’s telecoms company.
The plan calls for groups of private companies to bid for the right to build and run the network, which would rent capacity to companies offering mobile services.
But since the reform legislation was enacted, prices for some telecoms services have declined, the regulator has said Slim’s America Movil is complying with new rules, and AT&T Inc entered the market through its purchase of the No. 3 and No. 4 wireless carriers, Iusacell and Nextel Mexico.
“Mexico’s telecommunications sector is different today to two years ago, the tender for the shared network has to recognize that,” Monica Aspe, the deputy minister in charge of telecommunications at the Ministry of Transport and Communications, said in an interview.
The network will need some operators to be clients for it to reach a 20 to 25 percent share of the mobile market by revenue within 10 years and thus be profitable enough to be attractive, Aspe said.
The government is considering whether the law would allow existing companies like AT&T and Telefonica SA to participate not just as clients in the network and whether the winning group should be allowed to sub-let spectrum, Aspe said.
“The network shouldn’t be designed as or perceived as a competitor to the operators that have their own infrastructure, but as an enabler,” she added.
Current government assumptions mean the project would cost around $7 billion, compared with the original $10 billion over 10 years, mostly because the number of cell towers required will be closer to 12,000 than 20,000, the minister said.
All figures are the government’s working assumptions and could change as participants run their own numbers during the tender.
The deadline to show interest in the project was earlier in May. Aspe said that more than 40 parties had participated, ranging from operators and manufacturers to consultants.
China Telecom Corp Ltd said earlier this year its parent was studying an investment opportunity in Mexico, after Reuters reported it was planning a bid for the network.
China’s Huawei, Finland’s Nokia, U.S. equipment maker Cisco Systems Inc and Sweden’s Ericsson have all also reportedly shown interest.
The shared network is a cornerstone of a plan to improve rural coverage in Mexico, which has one of the lowest cell penetration levels in Latin America.
Under the government’s assumptions, Aspe said, the network makes the most profit when it covers 85 percent of Mexico’s population, and stops being profitable at around 95 percent.
She said the government will take decisions to maximize the coverage within that range. (Reporting by Christine Murray and Tomas Sarmiento; Editing by Christian Plumb, Leslie Adler and Lisa Shumaker)