AT&T gains approval for spectrum deal in Mexico

AT&T (NYSE: T) continued to pursue the Mexican market with a spectrum-leasing deal and swaps of frequency blocks with Telefonica SA, Reuters reported. The Federal Telecommunications Institute (IFT), Mexico's telecoms regulator, approved the agreements between the two main rivals to America Movil, the nation's dominant carrier owned by billionaire Carlos Slim.

The deal will give AT&T access to spectrum in the range of frequencies in the 1.7/2.1 GHz band in some areas, while Telefonica will be able to use it in the 1.9 GHz band.

After spending a total of $4.4 billion to acquire Mexican operators Iusacell and Nextel Mexico, AT&T earlier this year unveiled plans to spend $3 billion to cover 100 million people in Mexico with LTE by the end of 2018. It began rebranding its Mexican mobile operations under its own name in August, and launched service in October in six markets.

The second-largest U.S. operator sees an opportunity to provide 4G services to users who don't yet have access to LTE. Roughly 35 percent of POPs in Mexico were covered with LTE as of the first quarter of 2015, according to GSMA Intelligence, while 95 percent of POPs were covered with 3G.

And AT&T is hoping to take advantage of the IFT's efforts to toughen regulations in an effort to loosen Slim's hold on the telecommunications market and spur competition.

But while regulatory support has helped AT&T move into Mexico, the success of the carrier's longer-term efforts are still uncertain. HSBC recently predicted that whatever benefits AT&T has seen south of the border are likely to shrink or even disappear over the next few years. The financial services company predicted AT&T will claim 20 percent of Mexico's mobile market by 2020, seeing an ARPU of $14. And it said the carrier isn't likely to generate profits in the country until 2019, one year later than AT&T has predicted.

For more:
- See this Reuters story

Related articles:
AT&T starts to rebrand Mexican wireless operations, takes credit for spurring cross-border offerings
AT&T to spend $3B to cover 100M Mexicans with LTE by 2018
AT&T's Stephenson: It will take 18 months to build out 'robust' LTE coverage in Mexico

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