AT&T to spend $3B to cover 100M Mexicans with LTE by 2018

AT&T (NYSE: T) said it will spend $3 billion during the next four years to cover 100 million people in Mexico with LTE by the end of 2018.

AT&T said the first phase of its LTE network buildout will be complete by the end of this year and will cover 40 million Mexicans, which the carrier said represents about one-third of the country's population. By the end of 2016, AT&T said it plans to cover 75 million people, or nearly two-thirds of the population.

According to GSMA Intelligence, the research unit of the GSMA trade association, only about 35 percent of POPs in Mexico were covered with LTE as of the first quarter of 2015. The firm said 95 percent of POPs were covered with 3G. 

Separately, AT&T also announced it will offer new plans to its existing Mexican customers "that take advantage of the company's North American Mobile Service Area." The carrier said the new plans will allow its Mexican customers to use their voice, data and text messaging services while in the United States. "Customers on these new plans will also be able to use their available community minutes to call friends and family in the U.S. who are on the AT&T network," the carrier said.

The operator also said it will offer Google Play billing in Mexico for Android smartphone users--the service allows customers to purchase Android apps, books, movies, music and games and have the cost added to their monthly AT&T wireless bill.

"We are building a network in Mexico that is capable of bringing innovation and economic vitality to the country, just as we have done in the U.S.," said AT&T Chairman and CEO Randall Stephenson. "We plan to deliver high-quality, high-speed mobile Internet service to Mexico, creating the first-ever North American Mobile Service Area covering 400 million people and businesses in Mexico and the U.S. This seamless network will link together our two countries' economies, people and cultures like never before."

AT&T's actions stem from the carrier's acquisitions earlier this year of Mexican wireless operators Iusacell and Nextel Mexico for a total of $4.4 billion. The carrier had promised to expand and enhance its network in Mexico, but until this announcement AT&T hadn't provided specific financial metrics or coverage goals.

"We view this news as a positive for T," wrote Wells Fargo analyst Jennifer Fritzsche. "The company has messaged its commitment to the Mexican market prior--and its desire to build on its acquisitions of Iusacell and Nextel Mexico--but quantifying its investment of $3B over 3.5 years offers a little more detail into T's commitment and expected timing of its expansion plans. We continue to believe in T's strategy of providing 400M covered POPs across the U.S. and Mexico, and would expect it to be a major part of its strategic conversation expected to come at its analysts day after its DTV acquisition closes."

AT&T currently counts a total of around 9 million wireless customers in Mexico. In Mexico, AT&T will compete against Telefónica's Movistar and billionaire Carlos Slim's América Móvil, which controls around 70 percent of the Mexican wireless market.

In terms of the spectrum AT&T can use to deploy new services in Mexico, AT&T's Iusacell controls between 20 and 25 MHz of 800 MHz spectrum, primarily in the southern half of the country, including Mexico City and Guadalajara, and an average of 39 MHz of PCS spectrum nationwide. The carrier's Nextel Mexico business controls around 20 MHz of 800 MHz spectrum and 30 MHz of AWS spectrum. That's roughly the same spectrum bands AT&T uses in the United States for its wireless business.

For more:
- see this AT&T release