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Telecommunications EquipmentOverviewReturn to top2008 2009 (estimated) 2010 (estimated)Total Market Size 10,230 11,050 12,708Total Local Production 6,460 6,977 8,024Total Exports 3,760 4,061 4,670Total Imports 6,735 7,274 8,365Imports from the U.S. 4,050 4,374 5,030Figures in US dollars . Source: The Competitive <strong>In</strong>telligence Unit.Technological convergence has used broadband connectivity as the main focal point inthe telecommunications industry worldwide, and the Mexican telecom market is noexception. Fixed, Wireless and Cable TV (CATV) providers are integrating voice, dataand video services in Triple Play packages. Today the fixed telecom market is definedby fixed carriers such as, dominant player, Telmex; as well as smaller traditional playerssuch as Axtel, which focusing on increasing coverage and deploying WiMAXinfrastructure; Alestra seeking to brand itself as a corporate provider <strong>of</strong> Value AddedServices, and Maxcom increasing its position as a residential provider <strong>of</strong> QuadrupleServices (fixed voice, data, video, and wireless). However, with technological advancesand number portability regulation, CATV companies such as Megacable, Cablevisiónand Cablemás, are also together successfully providing fixed telephone services toalmost 500 thousand residential subscribers. Unfortunately, 2009 had many factors thataffected the sector for additional investment and the growth <strong>of</strong> both in revenues andsubscribers, such as number portability, reduction <strong>of</strong> rates, and Triple/Quadruple Playpackages, and as a result Mexico continues to keep the same 20 million fixed lines.2009 also was the worst year for industry growth in the last 5 to 6 years. This sector hadbeen growing at double digits, and it is expected that at the end <strong>of</strong> 2009, the telecomsector will close with an 8% growth with an estimated value <strong>of</strong> US$43 billion.The wireless industry is Mexico is one <strong>of</strong> the most dynamic sectors in the Mexicaneconomy reaching a total <strong>of</strong> 81 million users by the end <strong>of</strong> 3Q09, representing MX$51.9billion pesos that represent almost US$4 billion with an exchange rate <strong>of</strong> 13.26 pesosper dollar. However the strong growth rates both in revenues and users are showingsigns <strong>of</strong> decreased acceleration given by market maturity, but also by regulatory andfiscal initiatives recently implemented. The Ministry <strong>of</strong> Finance and Public Credit (SHCP)has passed a 3% special tax on telecom services plus an additional 1% <strong>of</strong> Value AddedTax (IVA). As <strong>of</strong> 3Q09 Mexico reached a penetration rate <strong>of</strong> 76% is smaller whencompared to other Latin American markets, such as Argentina with 117%, Brazil with87% and Chile with 91%. Despite the challenges, experts agree that Mexico is hasplenty room to grow in rural connectivity and estimate that other 30 million subscriberscan be targeted in the near future.Best Products/ServicesReturn to topAs in 2008 we maintain our expectation that the best products will remain in the ICTconvergence area, led by:
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