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AT&T's 4G LTE Network Expansion Plans on Track in Mexico

U.S. telecom behemoth AT&T Inc. T is gradually expanding its 4G LTE wireless networks in Mexico. Currently, the service spans across 42 Mexican cities catering to around 45 million subscribers. It is likely to cover 75 million subscribers by the end of 2016.  AT&T added around 1 million LTE subscribers in the first quarter of 2016.

Further, the company aims to provide 4G LTE mobile Internet service to 100 million Mexican customers by the end of 2018. Management has decided to invest $3 billion toward the expansion of high-speed mobile Internet network in the country.

Last year, AT&T forayed into the Mexican telecom industry with the acquisition of Grupo Iusacell and Nextel de Mexico for a total consideration of approximately $4.4 billion. In 2014, the government of Mexico introduced several reforms within its telecom sector, which was highly monopolistic with one or two major companies dominating the market. With the new reforms opening up considerable scope for investment in Mexico, AT&T is striving to capitalize on this opportunity.

The acquisitions of Grupo Iusacell and Nextel de Mexico have added around 12.2 million subscribers to AT&T’s kitty. The combined synergies from the two buyouts have positioned AT&T as a formidable player in the lucrative wireless market of Mexico. At present, America Movil SAB AMX controls nearly 70% of the Mexican wireless market, serving around 65 million people while Telefonica SA TEF commands around 20%, addressing around 50 markets.

AT&T also plans to create a North American mobile service area covering more than 400 million customers and businesses enterprises in Mexico and the US. In Oct 2015, the company introduced a Pan-American cross-border unlimited voice and text-messaging service for new and existing subscribers of the post-paid plans 'AT&T Unidos' and 'AT&T Unidos Prepago' at no additional cost.

Meanwhile, T-Mobile US Inc. TMUS has also introduced an innovative 'Mobile without Borders' plan through which its subscribers will be able to make calls to Canada and Mexico without having to pay any roaming charges.

Mexico is the largest economy in the Latin American region with a growing middle class population that is eager to spend more on high-speed wireless networks for more optimal use of smartphones and tablets. Also the wireless penetration rate is relatively lower in the country compared to the U.S. We, therefore, expect increased competition in this market going forward.

AT&T currently carries a Zacks Rank #3 (Hold).

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AT&T INC (T): Free Stock Analysis Report
TELEFONICA S.A. (TEF): Free Stock Analysis Report
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T-MOBILE US INC (TMUS): Free Stock Analysis Report
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