Mexico awards US$7bn telecom project

Mexico awards US$7bn telecom project

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Ministry of Communications and Transportation of México (SCT) has announced it has awarded the Public Private Partnership (PPP) contract for the design, financing, deployment, operation and commercialization of Red Compartida.

The awarded consortium, Altan, was the last remaining bidder for the delayed tender on the national wholesale mobile network. Altan’s economic offer is solvent having demonstrated its economic and financial capabilities in accordance to the terms and conditions established in the tender rules. The Altan’s population coverage offer was of 92.2%, complying with the 85% minimum established in the tender rules.

The partners of Altan, which will be the partners of the special purpose vehicle (SPV) that will sign the PPP contract are:

  • Marapendi Holding B.V. (33.38%)
  • CMF Investment Company II B.V. (23.36%)
  • International Finance Corporation (3.34%)
  • Isla Guadalupe Investments S.L.U. (3.34%)
  • Hansam S.A. de C.V. (9.35%)
  • Fideicomiso de Coinversión 2431 (12.68 %)
  • FFLATAM 15-2 (6.54 %)
  • Mega Cable S.A. de C.V. (4.01%)
  • Axtel S.A.B. de C.V. (4.01%)

The project includes design, installation, deployment, operation, maintenance and updating of the Shared Network and Wholesale Telecom Service. The private developer will be responsible for implementing a new telecom system including the optimization of the assigned spectrum (700 MHz band). The total budget for the project is estimated around US$7 billions.

As we reported in October, SCT received two bids to develop the project.  The biding teams were the Consorcio Altan and a consortium formed by Rivada Networks and Spectrum Frontier LP. This proposal was declared “non-solvent” for not submitting a bid bond mandated by the tender rules.

In late July, the Mexican Government extended the deadline for the Red compartida PPP project. The initial deadline for private developers to submit its proposals for the telecom concession was on August 8, but it was extended to October 20 as some bidders requested more time to arrange the financing and other aspects of the project.

Bank of América Merrill Lynch, who is acting as financial advisor for the (SCT), also recommended this modification in the schedule of the tender process in order to raise the quality of private proposals. 

Ezequiel Gil Huerta, General Director of Telecommunications and Broadcasting Policy of the SCT, said:

“Altan demonstrated its capacity to put in all the financial and economic resources to carry out the Project, of which at least 30% will come from its capital. Likewise, Altan presented the necessary letters of credit and demonstrated its capacity to repay the debt in compliance with the terms of such letters.”

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