US tariffs increase uncertainty in Mexico's ICT market

Tariffs imposed by the US are exacerbating the regulatory and market challenges Mexico's telecoms sector has been grappling with.

While the tariffs may not directly impact the ICT market, they could potentially undermine Mexico's economy and ambitions to become a nearshoring hub.

"Much of what we have seen in the second half of [last] year and the beginning of 2025 is that telecommunications operators have been reluctant to invest in the face of regulatory changes and macroeconomic uncertainty," Carlos Roberto Hernández, analyst at The CIU told journalists on Tuesday.

Combined, Telmex, Izzi Telecom, Megacable and Totalplay invested 38.3bn pesos (US$2.07bn) in 2024, up 0.7% on 2023, El Economista reported. 

After years of rising investments, the operators are now prioritizing financial performance. But revenues are declining, and the global crisis affecting the industry has resulted in market consolidation in other countries.

The Mexican market is also dealing with regulatory shifts and economic volatility.

Last year, legislation to abolish independent regulators like telecoms watchdog IFT was approved. The new digital transformation agency (ATDT) will take on some of the IFT's functions, while other agencies will oversee competition issues.  

Mexico's macroeconomic outlook is unfavorable, which affects the telecoms sector. "We are on the eve of a recession," The CIU analyst Ernesto Piedras said. 

The IMF expects overall growth of 1.4% this year, compared to 1.8% in 2024 and 3.3% in 2023. The central bank projects 1% for 2025. 

Meanwhile, the US tariffs could undermine Mexico's nearshoring ambitions. If fewer companies invest in the country to serve the US market, the B2B telecoms sector may struggle. 

Mexico is expected to announce countermeasures in the coming days, although their scope remains unclear.