Inflation is not to blame
This is not the first time that the company has increased the prices of its connectivity services. In April of last year, the rates of its mobile rentals rose to 50 pesos due to the high inflation that was suffocating companies as well as consumers.
But AT&T’s new rate increase comes at a time when inflation has begun to slow. In the first half of May, it decreased 0.32% compared to the previous one, to settle at 6% annually, according to INEGI data. So why is the company raising its prices?
The INEGI National Consumer Price Index (INPC) revealed that mobile service costs fell 8.6% in the first quarter of this year, compared to the same period last year. In contrast, companies like AT&T have had to invest more to continue deploying their 5G network and at the same time maintain 4G to improve their service, while MVNOs do not need to invest in network maintenance, since they use Altán Redes or from some other telecommunications operator.
“It is a reality that AT&T faces an increase in operating and investment costs for its 5G network like the entire global and national economy,” explains Fernando Esquivel, director of market research at The Ciu consultancy.
“Inflation is, in fact, a factor that has led to the decrease in mobile telephony prices by approximately 34% in real terms since the telecom reform. However, this situation becomes almost unsustainable for operators in Mexico “, says Jorge Bravo, a telecommunications analyst at the Digital Policy Law consultancy. “It is natural that, in an environment of inflation and after a pandemic in which all inputs and technological resources have increased and are priced in dollars, companies seek to increase their prices to recover the investment made and achieve a return with the fees to be paid by its users.
To face this situation, AT&T has implemented a strategy focused on achieving operational efficiencies, such as returning radio spectrum to the State. In Mexico, this input is the most expensive for telecommunications companies compared to other Latin American countries, making it difficult to acquire new bands. And now the price increase in AT&T mobile service plans is added.
Although the growth of AT&T’s postpaid segment is slow, with only an increase of 3.8% in the first three months of this year, experts believe that the company will not experience significant impacts since postpaid users are the ones who can best absorb price increases.