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 the company offset ongoing its US weaknesses. In Mexico, AT&T added 1.3 million wireless net subscribers in 4Q16, as compared to 0.6 million in 4Q15.
Total Mexican wireless subscribers for the company are now 12 million in more than 160 markets with 78 million 4G LTE (long-term evolution) POPs (points of presence). In Latin America, DIRECTV lost 21,000 video subscribers in 4Q16, primarily driven by declines in Brazil.
The 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 the end of 4Q16, AT&T’s pay-TV subscriber base in the US reached 25.3 million, surpassing Comcast’s (CMCSA) subscriber base. Comcast had 22.5 million pay-TV subscribers. Charter (CHTR) came in third, with ~16.9 million pay-TV subscribers.
Notably, AT&T gained 235,000 satellite video subscribers but lost 262,000 U-Verse video subscribers in 4Q16, 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 that it intends to acquire Time Warner (TWX) is viewed as another attempt by AT&T to pursue revenue growth outside its traditional wireless business, where competition has become more intense.
By comparison, Verizon Communications (VZ) has taken a different approach to diversifying its wireless business. Verizon’s acquisitions of AOL and Yahoo are aimed at gaining a significant foothold in the online advertising space.