Yahoo Finance AT&T Eyes Mexico for Growth, Plans to Step Up Investments - Analyst Blog
In order to gain enhanced market traction, U.S. telecom behemoth AT&T Inc. T is planning to increase its investments in Mexico over the next three years. Toward this end, the company has already acquired Iusacell, the third largest wireless service provider in Mexico for $2.5 billion ($1.7 billion in cash + $800 million of Iusacell’s outstanding debt). Also, in the previous month, the company had acquired the Mexican operations (popularly known as Nextel de Mexico) of the currently bankrupt wireless operator NII Holdings Inc. for $1.88 billion.
Expansion in Mexico is not a new strategy for AT&T. In Jun 2014, the company had sold its 10% stake in America Movil S.A.B. de C.V. AMX for $5.57 billion to a real estate company controlled by Carlos Slim, who also owns America Movil.
Recently, the company’s Senior Executive Vice President and CFO, John Stephens stated that the company intends to take advantage of low smartphone penetration by introducing remodelled phones under the Next equipment installment plan (EIP).
It is likely to take months for AT&T to deliver strong LTE data in the exteriors of Mexico, revealed CEO Randall Stephenson.
Last year, the government of Mexico reformed its telecommunications sector, which was highly monopolistic with one or two companies dominating the market. As the new reforms open up considerable scope for investment in Mexico, AT&T is striving to capitalize on the opportunity.
Mexico is the largest economy in the Latin America region with a growing middle class population eager to spend more for high-speed wireless data transfer on smartphones and tablets. Also, the wireless penetration rate is relatively lower in the country compared to the U.S.
AT&T currently has a Zacks Rank #3 (Hold).
Stocks to Consider
Better-ranked stocks in this sector include BCE Inc. BCE and Cincinnati Bell Inc. CBB. Both the stocks hold a Zacks Rank #2 (Buy).
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