Why Is AT&T Continuing to Gain Market Share in Mexico?

AT&T (T) is continuing to invest significantly in Mexico. The company expects this investment to start paying off in 2017, which should help its profitability going forward.

AT&T’s focus on growing its newly acquired Mexican operations appears to have been successful, helping to offset its ongoing weakness in the United States. T-Mobile (TMUS) and Sprint (S) have made much of their abilities to steal customers from other carriers, including Verizon (VZ) and AT&T.

During the Deutsche Bank Media, Internet and Telecom Conference on March 8, 2017, John Stephens, AT&T’s chief financial officer, spoke about AT&T’s ability to gain market share in Mexico. Stephens said, “The growth is coming from having 80 million people covered with just a lightning speed quality LTE network.”

He continued, “We also built great distribution and we have also built a great brand and we have also built a great employee base that treats customers right. So when you see that we are an attractive competitor in the marketplace because the quality of our products and services exceed our competition.”

In Mexico, AT&T added 1.3 million wireless net subscribers in 4Q16, compared to 0.6 million in 4Q15. According to AT&T’s 4Q16 earnings conference call, the total number of Mexican wireless subscribers for the company is now 12.0 million in more than 160 markets, with 78 million 4G LTE (fourth-generation long-term evolution) POPs (point of presence). In Latin America, DIRECTV lost 21,000 video subscribers in 4Q16 due to falls in Brazil.

In 2015, to penetrate the Mexican market, AT&T acquired wireless telecommunications companies Iusacell and Nextel Mexico for a total transaction value ~$4.4 billion. To penetrate the Latin American market, it acquired DIRECTV for ~$49 billion. 

AT&T operates a wireless business in Mexico and satellite entertainment services in Latin America.