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AT&T Could Continue to Gain Market Share in Mexico in 4Q16

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Jan. 19 2017, Updated 7:35 a.m. ET

AT&T’s expansion into Mexico and Latin America

AT&T’s (T) focus on growing its newly acquired Mexican operations appears to have been successful, helping to offset ongoing US weakness. The opportunity for expansion in Mexico and Latin America is significant. AT&T is expected to continue to gain market share in Mexico as it expands its LTE (long-term evolution) coverage there.

In Mexico, AT&T added 743,000 wireless net subscribers in 3Q16, and total Mexican wireless subscribers for the company are now 10.7 million. In Latin America, DIRECTV lost 48,000 video subscribers in 3Q16, driven by falls 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 United States, as we can see in the above chart. After this deal, AT&T’s pay-TV subscriber base in the United States reached 25.3 million, surpassing Comcast’s (CMCSA) subscriber base. Comcast stood second, with 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, highlighting the structural fall 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 its acquisition of Time Warner (TWX) can be seen as another attempt by AT&T to pursue revenue growth outside its traditional wireless business, in which competition has become more intense.

Verizon (VZ) has taken a different approach to diversifying its wireless business by acquiring AOL and Yahoo! in order to be a significant player in the online advertising space.

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