Company Trend Analysis - Ultravision's Inherent Limitations Undermine LTE Pro Investment Case - MAY 2017

BMI View : Ultravision will enjoy few first-mover advantages in both the telecoms and pay-TV markets as it moves to launch '4.5G' services in Mexico. Investment constraints aside, a comparative lack of visibility as a brand is a major obsta cle that must be overcome. Furthermore, Mexican consumers ' limited engagement with OTT services in general means that it will struggle to realise a satisfactory return on its investment.

Nokia has agreed to supply a 4.5G LTE Pro network to pay-TV operator Ultravision, making it the first Mexican player to offer 'ultra ultra broadband' mobile services capable of supporting high-quality streaming video. However, while we appreciate the great potential LTE Pro technology has in enabling the operator to extend its services into new markets, we believe it will still struggle to differentiate itself in areas dominated by the Televisa group due to a lack of brand recognition and limited service differentiation.

Ultravision's broadcasting concession is currently restricted to six large cities (including Puebla, Aguascalientes and Tlaxcala); its 'Ultra'-branded pay-TV, voice telephony, broadband and radio services therefore have a limited reach relative to larger players such as Televisa, DISH and Megacable. Promoting the brand in new markets will be very costly, so the company will need to make parallel investment in new and original content to make itself stand out.

Ultravision Lacks Potency
Mexico: Pay-TV Market Shares (%), Q316
Note: Ultravision included in 'Others'. Televisa includes multiple sub-brands, including Sky, Cablevision and Cablemas. Source: IFT, BMI

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