GTE to Enter Mexican Phone Market

From Bloomberg Business News

GTE Corp., looking ahead to the opening of Mexico's long-distance telephone market, said Tuesday that it signed a memorandum of understanding with Valores Industriales and Grupo Financiero Bancomer to explore long-distance service there.

American telecommunications companies are interested in filling a market that is virtually untapped and serving a population hungry for phone service. Mexico has fewer than eight phone lines per 100 residents; most developed countries have 30 to 40 lines per 100. The United States, by comparison, has 60 lines per 100 residents. Mexico hopes to have 18 lines per 100 residents by the year 2000.

The North American Free Trade Agreement is expected to spark dramatic expansion in Mexico's $6-billion long-distance market, said Guillermo Amore, senior vice president for GTE Telephone Operations.

Mexico's long-distance telecommunications market is scheduled to open to competition at the beginning of 1997. Currently, Telefonos de Mexico holds a monopoly. It will keep its monopoly in local telephone service until 2026.

MCI Communications Corp., the second-largest provider of long-distance service in the United States, recently announced that it was joining forces with a company to explore providing long-distance service in Mexico. AT&T; Corp., Sprint Corp. and BellSouth Corp. also have Mexican partnerships looking at long-distance opportunities there.

The GTE memorandum commits the three partners to work jointly and exclusively toward creating a new company that will explore opportunities.

The alliance puts GTE, a provider of local service in the United States, together with Mexico's largest bank company and its leading beverage bottler. Bancomer, with $37 billion in assets and more than 900 branches, said it already has built an extensive telecommunications system in Mexico.

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