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AT&T’s Ambitions in Mexico

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Updated

LTE expansion

AT&T (T) has planned significant LTE (Long-Term Evolution) deployment in Mexico. Highlighting its plans for newly acquired Mexican wireless space, the company’s press release stated that “AT&T has 132 million wireless subscribers in the US and Mexico; offers 4G LTE mobile coverage to nearly 310 million people in the US and expects LTE coverage to 350 million people in its North American service area by the end of the year; covers 57 million US customer locations with high-speed Internet; and has nearly 16 million broadband subscribers.”

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Previously in this series, we noted that America Movil’s (AMX) Telcel and Telefonica (TEF) Mexico currently dominate this wireless market. AT&T plans a significant LTE expansion in this market through 2018. As the chart above shows, the US telecom company plans to reach a coverage of 25 million people in 3Q15, and it expects to have an LTE coverage of 100 million by the end of 4Q18.

Financial impact

According to AT&T, it will invest ~$3 billion in its Mexican operations and will make the larger proportion of these capital investments in the 2016–17 period. The company expects to start earning profits from these operations in 2018, anticipating that they will generate a positive EBITDA (earnings before interest, tax, depreciation, and amortization) by the end 2017.

You may consider taking a diversified exposure to AT&T by investing in the iShares Core S&P 500 ETF (IVV). IVV held ~1.1% in AT&T on July 31, 2015. Alternatively, you may consider the iShares Russell 1000 Value ETF (IWD), which held ~1.7% in AT&T at the end of July.

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