Major Mobile Phone Outage in Mexico Spotlights Latin American Market's Growth

The mobile phone market in Latin America is hot, but the question is, is rapid growth a factor in yesterday's major system failure?

On Tuesday, millions of Mexican users of the country's largest mobile phone provider were unable to use their phones due to a massive system failure, sparked by a "saturation problem" originating in part of the city and spreading through much of the system.

Spun off from Telefonos de Mexico in 2000, the Telcel network in Mexco is now owned by America Movil [NYSE: AMX] [NASDAQ: AMOV] [BMV: AMX], owned 66% by Carlos Slim Helú, and 25% by SBC International. America Movìl is a major force in the Latin American mobile phone market, providing service in 14 countries in the region. Carlos Slim Helú, a Mexican investor, is considered to be the third wealthiest man in the world, with investments focused in telecommunications and diversified into a small airline, financial services, and holdings in Saks, Inc. His company's mobile phone holdings have been expanding rapidly in Latin America, boosted by the activities of Venezuela's Hugo Chavez, whose anti-American influence has played a role in pushing Verizon communications out of a number of markets in the region.

The failure was characterized by America Movìl's spokesperson as a "saturation problem," with a domino-effect of resources being drained into the affected area and causing widespread failures, similar to the power grid problems that caused New York City's blackout in 2003.

America Movìl's growth has been substantial, and it controls 70% of a booming market in Mexico. The company is expanding into new technologies, recently signing an agreement with MobiTV for wireless media transmission technology. Telcel has been in business since 1989, and has built a GSM/GPRS system compatible with many international mobile phone networks, offering a wide variety of data and voice services to individuals and corporations in over 100,000 towns and cities in Mexico.