Megacable Holdings is not a company that has the ability to influence the pay television market with commercial strategies in its favor, in actions such as the establishment of fees for packaged services or the purchase and distribution of content that have as objective the displacement of competitors already established or to inhibit the entry of new players in that business, at least that happens in the markets of Tlaquepaque and Puebla capital, ultimately resolved the Federal Institute of Telecommunications (IFT).
The sector regulator has not yet revealed whether Megacable can influence the pay television business of 14 other relevant markets out of a total of 16 studied in five states of the Republic and if so, then it will declare that company as an agent with substantial market power there and then it will have the regulatory measures applicable to that company to balance the opportunities of all participating operators in those markets, including studying the possibility that an agent with the restriction of selling pay television services there, is now allowed to commercialize that type of products in those squares.
The Investigative Authority of the IFT suspected since January 2020 that the sale of Axtel assets by Megacable, between 1,370 kilometers of fiber optic network network and last mile infrastructure and 55,000 video clients worth 1,150 million pesos, would end in Megacable becoming an agent with too much market in 16 relevant markets of the Republic, particularly in the restricted television business.
In May 2019, Megacable and Axtel notified the IFT of their intention to purchase and sell assets in different states of the country. The concentration was carried out based on the ninth transitory article of the Federal Telecommunications and Broadcasting Law (LFTR), which allows the concentration of third companies without an essential validation by the authority, as long as there is a company with the declaration of preponderant economic agent, a name that today reaches Telmex.
Although Megacable and Axtel obtained the authorization of the IFT plenary session, the Investigating Authority initiated an investigation based on file AI / DC-003-2019 and also used file UCE / AVC-001-2019 of the Economic Competition Unit of the IFT to solve in the last if Megacable it could become an agent with substantial market power in restricted television or in fixed telephony and broadband Internet, in all of them.
Both the Investigative Unit and the Economic Competition Unit observed that after the concentration of Axtel’s assets in favor of Megacable, the market share of the latter in the studied municipalities increased significantly, reaching 64.94% of the entire business. in some of those markets. On average, Megacable came a 51% share in pay television from 16 markets studied and in 14 of them, it became the first actor, well ahead of Totalplay, Dish O Izzi Telecom and Sky, the direct competitors in the segment and therefore the IFT investigations.
They also identified that Megacable, from 2016 to 2019, it had increased the prices of its pay television service packages, without this necessarily having translated into an improvement in the characteristics of the products that consumers were receiving then.
Those autonomous units of the IFT began their investigations, because they found elements with which it could be demonstrated that Megacable could be an agent with substantial power in pay TV in the Mexican municipalities of San Mateo Atenco, Lerma, Toluca, Metepec and Zinacantepec; in León, Guanajuato; in Guadalajara and Tonalá; in Cuautlancingo and San Pedro Cholula and San Andrés Cholula; and in Corregidora, Querétaro and El Marqués. Also in Tlaquepaque and Puebla, although there the IFT determined that there are not enough elements to issue this type of declaration to Megacable.
In total, the IFT investigated 16 relevant markets and of all of them, it already found that Megacable It is not an agent with substantial market power in the provision of fixed telephony service, nor in fixed broadband Internet service. It only remains to be clarified whether or not the company can influence in its favor in 14 of those 16 markets in terms of the provision of the restricted television service.
The IFT plenary session has already voted on file AI / DC-003-2019 and it is also about to reveal the results of its investigations in those other 14 markets studied.