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As Mexican Mobile Penetration Reaches 86%, Carriers Bet on the M2M Market

M2M Lines in Service (LIS) are expected to record a compound annual growth rate (CAGR) of 22.6 percent

Telecom operators in Mexico face myriad challenges, such as high mobile penetration, declining voice and messaging revenue, and intense market concentration. Furthermore, the traditional mobile communications services model, where connectivity is sold to other companies in the form of SIM Cards for use in their devices and applications, puts the operator in a weak position due to the low differentiation factor between competitors.

Frost & Sullivan’s analysis, Mexican Machine-to-Machine (M2M) Market, Forecast to 2022, finds that, with mobile penetration in Mexico at 86 percent, Mexican carriers are turning their attention to M2M as a new revenue source with significant potential. The M2M market is poised to grow rapidly through 2022 in Mexico. M2M offers the opportunity to generate revenue by managing sensitive data across multiple connected devices in the future.

“The enormous potential of M2M lies in its manifold uses, from providing connectivity to popular consumer electronic devices to providing households and businesses the tools to consume energy more efficiently,” said Ignacio Perrone, Digital Transformation Industry Manager.

The previous roadblock to M2M growth – a lack of widespread demand from enterprise customers – is changing. The transportation and logistics sector, as an example, has been an early adopter of M2M for asset tracking, route planning, and vehicle recovery, while other sectors such as manufacturing are starting to understand the benefits of leveraging the M2M platform. Traditional mobile operators are implementing strategies aimed at capturing emerging M2M deals and positioning their offerings to attract future growth opportunities.

To take advantage of the M2M growth opportunities in the market, mobile operators will need to:

  • Adopt solution-centered business models by moving beyond simple connectivity. A number of telecom service providers are offering their own suite of hardware, software, and services; and
  • Forge partnerships to offer and monetize end-to-end M2M solutions. An increase in the number of technology partner options in the earlier stages of the M2M value chain is demonstrating that several M2M applications can become relatively well-defined and standardized in the short term, facilitating market penetration.

“Standalone connectivity is commoditized and so the pressure on prices is high. Telcos’ level of revenues is therefore low, as well as their level of differentiation in the ICT industry. Service providers need to elevate the message by raising it above ‘connectivity,’ forging new narratives around business innovation and digital transformation capabilities in order to have an edge in this highly competitive market. M2M provides that opportunity,” added Perrone.

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