AT&T Attempting to Cross Borders by Renting Towers in Mexico from America Movil Spinoff
Having to now square off against a former ally, AT&T is reportedly hammering out a deal to rent wireless towers in Mexico from American Movil spin-off company Telesites.
If AT&T is able to secure an agreement with Telesites, it would gain access to around 11,000 wireless towers, allowing the company to greatly expand its own offerings in Mexico.
"Our priority is to begin work to expand our network and enhance our mobile Internet offering," AT&T spokesman Fletcher Cook said in an email to Bloomberg. "As we assess our options, we expect fair pricing, an expedited process, and efficient access similar to other tower companies."
AT&T acquired the third-largest Mexican wireless service provider Iusacell as well as Nextel Mexico last year. The second-largest carrier in the United States, AT&T is current strategy involves expanding south of the border into Latin America.
"Mexico is still in the early stages of mobile Internet capabilities and adoption, but customer demand for it is growing rapidly," said AT&T chairman and CEO Randall Stephenson last year. "This is an opportunity for us to provide Iusacell the financial resources, scale and expertise to accelerate the roll-out of world-class mobile Internet speeds and quality in Mexico, like we have in the United States."
Telesites, created in April, is the second-largest renter of tower space in Latin America. A spin off of America Movil and owned by billionaire Carlos Slim, Telesites controls around 80 percent of landlines in Mexico and 70 percent of mobile phones. The IFT, Mexico's version of the FCC, declared Telesites dominant in its industry.
AT&T gave up its stake in America Movil last year as part of its restructurion in order to place a $50 billion bid for satellite-TV provider DirecTV. AT&T has made it clear it plans on crossing into Mexico and, if it does so with a satellite-TV provider under its helm, it will certainly come into competition with America Movil. In response, America Movil is reportedly willing to spend $50 billion over the next five years on building a fiber-to-the-home network that would help expand its pay-TV services.
It's still unclear, however, whether AT&T has a realistic shot at acquiring DirecTV in the United States despite countries like Brazil giving a positive nod. Although the two do not directly compete in the wireless market, questions are still being asked about whether a merger between the two would result in unfair practices or a less competitive landscape. Recent attempts by Sprint and T-Mobile to merge and Comcast and Time Warner have ended badly, with the pressure from the FCC and government antitrust regulators proving too much. One thing is for certain, however: if AT&T gets DirecTV, things are going to change in the Latin American telecommunications market, and the incumbent players are preparing.
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