Connectivity in Mexico is hitting a regulatory wall. Telcel, the telecommunications giant under the América Móvil umbrella, reported a stark divergence in its first-quarter 2025 performance: while the company managed to add 91,000 postpaid subscribers, it lost 482,000 prepaid users. The company attributes this volatility not to weakening demand, but to a new mandate from the Telecommunications Regulatory Commission (CRT) requiring all mobile lines to be linked to a verified identity. The policy took effect on January 9, with a compliance deadline of June 30. After that date, any unregistered line will be restricted to emergency calls only — effectively severing the user from the network.

For a market where prepaid plans have long dominated, the numbers are telling. Out of Telcel's 84.3 million subscribers, only 5.7 million had completed the identity linkage process by the end of the first quarter. That gap — between the scale of the mandate and the pace of compliance — frames the central tension now facing Mexico's mobile industry.

A structural challenge, not a marketing one

Prepaid mobile service has been the backbone of connectivity across Latin America for decades. In markets where large segments of the population lack formal banking relationships or stable employment contracts, pay-as-you-go SIM cards offered a path to communication without institutional gatekeeping. Users could purchase a card at a corner store, load credit in small increments, and remain connected without submitting documents or signing agreements. That model helped drive mobile penetration rates well above those of fixed broadband across the region.

Mexico's mandatory registry disrupts this dynamic at its foundation. The requirement to link a SIM card to a verified identity introduces friction at the exact point where the prepaid model was designed to be frictionless. For users accustomed to anonymity and minimal bureaucratic interaction, the registry represents a qualitative change in the relationship between carrier and customer. The early data from Telcel suggests that a meaningful share of prepaid users are choosing disconnection — whether through inaction, distrust, or deliberate refusal — rather than compliance.

This is not without precedent. Several countries have implemented mandatory SIM registration policies over the past two decades, often citing security concerns such as combating extortion, kidnapping, and organized crime. Nigeria, Pakistan, and Kenya have all pursued similar mandates with varying degrees of enforcement rigor and public resistance. In some cases, mass disconnections followed initial deadlines, only for governments to extend compliance windows under political pressure. In others, the registries were implemented but their effectiveness in reducing crime remained difficult to measure.

The carrier's dilemma

For Telcel, the situation presents a problem that cannot be solved through pricing or network investment. The company's total subscriber base grew by a marginal 0.4% year-over-year, but that headline figure obscures the compositional shift underneath. Postpaid growth, while positive, is modest. The prepaid decline, by contrast, is sharp and accelerating under regulatory pressure. If the June 30 deadline holds firm and compliance rates do not improve substantially, the carrier faces the prospect of millions of lines going dark simultaneously.

The financial implications depend on how the situation resolves. Prepaid users typically generate lower average revenue per user than postpaid subscribers, but they represent volume — and in a market of Telcel's scale, volume matters for network economics, advertising reach, and competitive positioning against rivals AT&T México and Telefónica. A mass disconnection event would also raise questions about digital inclusion, particularly in rural and lower-income communities where prepaid service is often the only viable option.

The CRT, for its part, must weigh enforcement credibility against the social cost of cutting off tens of millions of users. Extending the deadline would ease immediate pressure but risk undermining the registry's authority. Holding firm would demonstrate regulatory resolve but could trigger a connectivity disruption with political consequences.

What emerges is a familiar but unresolved tension: the state's interest in traceability set against the informal infrastructure that made mobile access universal in the first place. Telcel's first-quarter numbers are an early signal, not a conclusion. Whether the prepaid exodus deepens or reverses as the deadline nears will depend on factors largely outside the carrier's control — the government's willingness to enforce, the public's willingness to comply, and whether either side blinks first.

With reporting from Expansión MX.

Source · Expansión MX