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AT&T’s Mexico Business Suffers Courtroom Loss

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May. 30 2019, Published 1:33 p.m. ET

Loss exposes AT&T to penalties

AT&T’s (T) subsidiary in Mexico has lost a long-fought class-action lawsuit, thereby exposing its parent to fines. According to a report by Reuters, a Mexican court ruled in favor of the country’s consumer protection agency, Profeco, which sued telecommunications operator Nextel for undue charges and poor service. Profeco sued Nextel in 2013. AT&T would later acquire Nextel in 2015 to expand its Mexican operations.

The loss of the class-action lawsuit means that AT&T will be required to pay fines as well as damages to the affected customers. What all that will cost AT&T is still unknown.

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AT&T’s Mexican revenue dropped 3.0%

AT&T is the third-largest mobile operator in Mexico. It finished the first quarter with 17.7 million subscribers in Mexico, but its revenue in the country fell 3.0% YoY (year-over-year) to $651 million in the first quarter, mostly dragged down by its equipment business, where sales plunged 22% YoY. América Móvil (AMX), one of AT&T’s rivals in Mexico, recorded a 3.1% YoY fall in revenue in the first quarter.

Overall, though, AT&T recorded an 18% YoY increase in its total revenue to $44.8 billion in the first quarter, better than the 6.0% YoY increase in revenue at T-Mobile (TMUS) and the 3.7% YoY increase in revenue at Sprint (S) in the same period. Comcast (CMCSA) and Charter Communications (CHTR), the two cable companies that have diversified into selling mobile phone services as well, recorded revenue rises of 18% and 5.1% YoY, respectively, in the quarter.

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