AT&T is clear from what weighs on it: what will happen to Mexico?

Asset divestment is AT&T’s way of improving its financial position. If there was any doubt about this, it was cleared this week when the agreement was known to sell Liberty Latin America its operations in Puerto Rico and the Virgin Islands . That will add about $ 1.95 billion to the cushion it has made with other operations, such as the exit of the entertainment service Hulu. He expects to end the year with $ 11 billion more in his pocket compared to the $ 8 billion expected. The question, almost obliged, is what will you do then with your business in Mexico.

Between 2014 and 2015, the American company acquired three local firms with which it currently maintains its operation. He first announced the purchase of Iusacell for 2.5 billion dollars and then he took Nextel for 1.875 million dollars . Things were not as expected and July of this year, three months after the scheduled deadline, indicated that local financial stability “is about to arrive.”

Today AT&T is the fourth telecommunications company that invests the most in Mexico, according to official information presented by the Federal Institute of Telecommunications (IFT). It is located behind Televisa, América Móvil and Altán, the consortium formed as the executing arm of Red Compartida. Meanwhile, it is the second in terms of income, with a participation of 12 percent of the pie. 63 percent is in the hands of Carlos Slim’s company. The third place, meanwhile, is for Grupo Televisa (11 percent).

The ghost of the AT&T Group is, like that of others, its debt. At the middle of the year this amounted to 157,937 million dollars. The item is better than the one announced a few months earlier, in detail it fell by five percent between January and July of this year.

In this financial context and with the almost consummate fact – pending regulatory confirmation – of its departure from Puerto Rico and the Virgin Islands, one version is gaining force: the possibility that AT&T will also leave Mexico. The Elliott Management Fund, which has a small equity stake in the operator, recently put that option on the table. The proposal includes the wireless operation and its business in Sky – it has a 41 percent stake – clarified local portal El Financiero.

AT&T recently decided to renounce more than 20 spectrum concessions for different stretches of the 800 MHz band in Mexico, which was clearly analyzed as a way to make the local operation more efficient. The local numbers, as already said, do not follow the operator’s intentions, because although its revenues increased by four percent year-on-year in the second quarter, in that period it showed losses of 207 million dollars.

In terms of users, the firm continues to get closer to Telefónica thanks to the incorporation of almost 300,000 lines in the last twelve months. It ranks third among providers with just over 18 million subscribers, which is equivalent to a market share of 14.8 percent. Telcel accounts for almost 63 percent and Telefónica 21 percent, among other firms. In terms of mobile revenues, better ARPU places AT&T with twice the share of Telefónica (18 percent vs. 9 percent) but still far behind the leader Telcel (71 percent) .

The American company has made steady progress in Mexico with a strategy that today allows it to serve just under eight million Telefónica customers, in a market made up of 118 million lines. On the postpaid level, it has an even greater share than this competitor, since it reaches a share of more than 27 percent in that segment. The company, meanwhile, concentrates more spectrum for mobile services after obtaining portions in the 2.5 GHz band.

On the other hand, it is just as true that AT & T’s good intentions have failed to overshadow Telcel. In fact, the operator blamed the stiff competition between the factors that contributed the most, in its opinion, to the failure of profitability to arrive in the timeframe set for its local operation. He also speaks at all times in favor of tightening the asymmetric measures that run for Slim’s company as the predominant in the telecommunications market.

Thus, those responsible for the local operation of the US company will have the mission of deciding on its future in Mexico. As at one point there was talk of the possibility of Telefónica exiting the local market, an idea that gained strength in recent months with the company’s departure from Central America, AT&T could also do so with an eye on reducing its debt. He will have to put white on black and determine if he does in Mexico what he just executed a few thousand kilometers away.

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