Can AT&T’s Mexico Unit Stop Losing Money?



AT&T lost $132 million in Mexico unit

AT&T (T) continues to gain ground in Mexico, with its Mexico wireless subsidiary adding 534,000 customers in the three months through March 31 to close the first quarter with 15.6 million subscribers. It gained more than 3 million subscribers over the past four quarters according to AT&T CEO Randall Stephenson in his presentation at a recent investor meeting hosted by JPMorgan Chase.

The problem is that AT&T is losing money in its Mexico operations. The Mexico unit lost $132 million in the first quarter compared to a $63 million loss sequentially.


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Profits rose more than 34% for AT&T

AT&T, whose net profit increased 34.4% YoY (year-over-year) to $4.7 billion in the first quarter, would have possibly reported a much stronger bottom line if it hadn’t lost money in its Mexico operations. Verizon’s (VZ) profit rose 31.7% YoY, while T-Mobile (TMUS) reported a 3.9% YoY decline in profits for the quarter. Sprint (S) generated $69 million of profit in the quarter, marking a sharp reversal from a loss of $283 million YoY.

End in sight for Mexico operations losses

Is there an end in sight to the losing streak in Mexico? AT&T says it expects its Mexico operations to become profitable this year, and it’s eyeing a profit in about the fourth quarter. Revenue for AT&T’s Mexico unit increased 14.1% YoY to $671 million in the first quarter, driven by an increase in the number of subscribers. The Mexico unit boosted its customer retention with its churn rate declining to 7% in the first quarter from 7.9% sequentially.


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