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Inside AT&T’s Expansion Strategy into New Markets

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AT&T’s expansion into Mexico and Latin America market

AT&T’s (T) focus on growing its newly acquired Mexican operations appears to be successful, helping offset ongoing US weaknesses in 3Q16. In Mexico, AT&T added 743,000 wireless net subscribers in 3Q16, and total Mexican wireless subscribers for the company have now reached 10.7 million. In Latin America, DIRECTV lost 48,000 video subscribers in 3Q16, mainly driven by declines in Colombia, Argentina, and Brazil.

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AT&T is a leading player in the US pay-TV market

Through its DIRECTV acquisition, AT&T has become the leading pay-TV player in the US. After this deal, AT&T’s pay-TV subscriber base in the US reached 25.3 million surpassing Comcast’s (CMCSA) subscriber base. Comcast stood second at 22.4 million pay-TV subscribers. Charter (CHTR) is ranked third, with 16.9 million pay-TV subscribers.

AT&T gained 323,000 satellite video subscribers but lost 326,000 U-Verse video subscribers in 3Q16, which highlights the structural decline that the US pay-TV market is going through.

AT&T has been trying to diversify its US wireless business, mainly due to the low-cost strategies being pursued by Sprint (S) and T-Mobile (TMUS). AT&T’s announcement of acquiring Time Warner (TWX) is seen as another attempt by AT&T to pursue revenue growth outside its traditional wireless business, where competition has become more intense.

Verizon Communications (VZ) has taken a different approach to diversifying its wireless business by acquiring AOL and Yahoo, with an aim to become a significant player in the online advertising space.

In the next article, we’ll discuss AT&T’s OTT (over-the-top) DIRECTV Now service.

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