AT&T Mexico Offers Video Bundle for Top-Ups

AT&T Mexico has recently launched a new offer in which all prepaid customers who top up by at least MXN 100.00 (US $4.63) will receive a free 7 GB data bundle for streaming video content. The bundle is advertised as being for use on YouTube, but it can also be used to access other platforms such as Netflix, Amazon Prime and HBO Go, albeit at 480p rather than HD quality. The promotion will run until 9 January 2020.

The U.S.-based operator added 668,000 Mexican prepaid customers from September 2018 to September 2019 to reach an overall customer base of 18.6 million, up 7.6 percent year on year.

Formed from the merger of operators Iusacell and Nextel under the aegis of the U.S. operator AT&T, AT&T Mexico has been in business for five years and during that time has come to control the majority of the country’s spectrum. The operator has achieved success in part by leveraging the close ties between Mexico and the U.S., offering customers on either side of the border advantageous deals on service and effectively unifying the two countries into one service area.

As Mexico is a developing market, there is strong support among customers for prepaid service, and AT&T has seen a significant uptake in that regard, with 668,000 new prepaid customers added over the past year, approximately. However, one issue with prepaid customers is that while they technically have the service, they may not be using it very much or even at all. Having the holders of AT&T SIMs not using those accounts is a problem that the operator seeks to remedy by incentivizing those subscribers to utilize the network.

Under the current offering, the incentive to spend at least MXN 100.00 is the gift of 7 GB of free data. That is a generous offer, in our view, especially given the fact that the amount of money in question is actually fairly modest. Promoting the data as being specifically for YouTube and then allowing it to be used for other streaming services is a clever approach, as it creates the feeling that the other uses are above and beyond expectations. Ordinarily, the lack of HD would be a distinct strike against this offering, but in context we do not think that it will be. These prepaid customers who make little use of their service are likely to be relatively undemanding in terms of image quality and will probably be thankful to have a free 7 GB of access to video streaming content.

If the offering proves persuasive, it should have the effect not only of stimulating spending on the part of the prepaid customer base but also of maximizing utilization of AT&T’s network, which is of course a desideratum for any mobile operator.

Tarifica is the global leader in monitoring and analyzing telecom pricing. Covering hundreds of operators in every region of the globe, Tarifica’s databases of mobile and fixed line data and voice tariffs are among the largest and most in-depth in the world. Tarifica is also a leading publisher of benchmark and other pricing reports, and its analysts are recognized authorities in the telecom industry, relied upon by operators and businesses worldwide for pricing insight and guidance.  

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AT&T Mexico Launches 4G in Six Cities

U.S.-based operator AT&T has announced that Iusacell and Nextel customers with an AT&T United plan can now access 4G/LTE services in a total of six Mexican cities. The service is available in Atlacomulco in the State of Mexico, Cuernavaca and Cuautla in Morelos, and Pachuca, Tulancingo and Tepeji del Rio in Hidalgo. Customers in the covered areas simply need an LTE-enabled smartphone and SIM card to access the network. In May the operator said it would be in a position to offer solid 4G coverage throughout Mexico by the end of 2016. This launch of 4G services in six major Mexican municipalities is the first step toward the realization of AT&T’s stated plan to create a North American mobile service area that will eventually cover more than 400 million customers and businesses in Mexico and the U.S. AT&T’s acquisition of Nextel Mexico and Iusacell for a combined total of US $4.4 billion earlier this year gave the U.S. operator the wherewithal to create this cross-border network. Nextel’s network serves some 76 million people in a nation of 120 million, while Iusacell brought AT&T 70 percent coverage and 8.6 million customers. However, in order for AT&T to truly integrate its Mexican network with its U.S. network, the quality levels in the two countries have to match, so it will be key for the company to have 4G in place in Mexico as well as in the U.S. This launch, though limited, points the way forward.

Tarifica is the global leader in monitoring and analyzing telecom pricing. Covering hundreds of operators in every region of the globe, Tarifica’s databases of mobile and fixed line data and voice tariffs are among the largest and most in-depth in the world. Tarifica is also a leading publisher of benchmark and other pricing reports, and its analysts are recognized authorities in the telecom industry, relied upon by operators and businesses worldwide for pricing insight and guidance. To learn more about Tarifica, please visit www.tarifica.com

AT&T Completes Nextel Purchase for US $1.875 Billion

U.S. operator AT&T has closed its acquisition of NII Holdings’ Nextel Mexico business for US $1.875 billion, after the deal was approved by Mexico’s regulator IFT and the U.S. Bankruptcy Court for the Southern District of New York, which is overseeing the restructuring of NII Holdings, after its bankruptcy filing in 2014. The acquisition excludes around US $427 million of net debt and other adjustments. The deal marks AT&T’s second purchase of a Mexican mobile operator this year; the first was Iusacell, which was acquired for US $2.5 billion in January. In the present deal, AT&T acquired all the companies operating under the name Nextel, along with their spectrum licenses, network assets, retail stores and subscribers, and AT&T said it will now integrate Iusacell and Nextel into a single operator.

In addition, AT&T confirmed plans to create what it described as the first-ever North American mobile service area, which will cover more than 400 million customers and businesses in Mexico and the U.S. The CEO of AT&T Mexico LLC and Iusacell, Thaddeus Arroyo, will lead the combined company.

After AT&T bought Iusacell and was looking to increase its position in Mexico, it faced the choice of whether to buy Nextel or to pick up those assets that América Móvil was planning to sell off. At the time we wrote that the Nextel option had the benefits of lower cost and fewer regulatory issues. As it happened, América Móvil has still not carried out the divestment that was supposed to take it below the 50 percent market share required to satisfy Mexican regulators. But AT&T has moved ahead with an acquisition that adds a significant amount of both infrastructure and customers, and the regulatory headwinds anticipated due to the deal’s status as a bankruptcy sale have turned out not to be a problem. The deal, announced in late January, took only a little over three months to close.

Nextel has around 3 million customers, and its network serves some 76 million people in a nation of 120 million. It controls 25 MHz of spectrum in the 800 MHz band and 30 MHz in the 1.7/2.1 GHz band. With this infrastructure, added to that of Iusacell, which has 70 percent coverage and 8.6 million customers, AT&T will significantly improve its ability to compete and perhaps even to achieve the top spot in the Mexican market. Just as importantly if not more so, the enlarged network capacity and coverage enable the U.S. operator to realize its vision of a combined service region extending across the U.S.-Mexico border. With over 30 million people of Mexican origin residing in the U.S., the market for communication with Mexico is very large—and, of course, rapidly growing. Whether or not the figure of 400 million customers is too high, a unified North American service area stands to win the AT&T/Iusacell/Nextel entity a bonanza of customers and potentially huge revenues from mobile traffic.

The above item appeared in a recent issue of The Tarifica Alert, a weekly resource that analyzes noteworthy developments in the telecoms industry from around the world.

Tarifica is the global leader in monitoring and analyzing telecom pricing. Covering hundreds of operators in every region of the globe, Tarifica’s databases of mobile and fixed line data and voice tariffs are among the largest and most in-depth in the world. Tarifica is also a leading publisher of benchmark and other pricing reports, and its analysts are recognized authorities in the telecom industry, relied upon by operators and businesses worldwide for pricing insight and guidance. Click here to contact a Tarifica Analyst

América Móvil Not Selling Frequencies or Infrastructure

Mexican mobile operator América Móvil has no plans to sell frequencies or infrastructure to reduce its dominant position in the country’s market, CEO Daniel Hajj told investors in a conference call. Hajj also said that the operator will analyze the new configuration of the Mexican telecom market with the entry of U.S. operator AT&T with the announced its acquisition of operators Iusacell and Nextel. “We’re reviewing exactly how the market is going to be in Mexico and then we’re going to decide what we’re going to sell to reduce our market share in order to avoid being a preponderant player,” Hajj said. “We are interested in divesting and reducing our market share but we do not know exactly how we want to do it.” On 17 April, shareholders of América Móvil approved the company’s plans to spin off some of its mobile infrastructure in Mexico into the new company Telesites, which would be listed separately on the stock market.

In July, América Móvil announced that it would break up its assets in order to bring its market share below the 50 percent level required by Mexican regulator to avoid a ruling of dominance. However, since then it has not presented a concrete plan to achieve that. Spinning off infrastructure into a separately listed company will not in itself reduce dominance, and Hajj’s remarks show that the company is still quite far from deciding how to proceed in Mexico’s new regulatory climate. This wait-and-see approach is understandable in light of the current uncertainty as to how AT&T’s acquisitions will play out in the marketplace. 

Tarifica is the global leader in monitoring and analyzing telecom pricing. Covering hundreds of operators in every region of the globe, Tarifica’s databases of mobile and fixed line data and voice tariffs are among the largest and most in-depth in the world. Tarifica is also a leading publisher of benchmark and other pricing reports, and its analysts are recognized authorities in the telecom industry, relied upon by operators and businesses worldwide for pricing insight and guidance.

Tarifica is a division of T3i Group, a diversified telecom information provider. To learn more about Tarifica, please visit www.tarifica.com. 

AT&T to Acquire Nextel Mexico for US $1.875 Billion

U.S. operator AT&T is continuing its expansion to Mexico with an agreement to buy Nextel Mexico for US $1.875 billion. The deal builds on AT&T’s takeover of Iusacell—which was announced in early November 2014—to add another 3 million customers and additional spectrum, retail and network assets. AT&T stated that Nextel’s network, covering some 76 million people, will help it realize its goal of creating a unified North American network spanning the U.S. and Mexico and covering over 400 million people. The acquisition excludes debt associated with Nextel Mexico and is subject to court approval in the bankruptcy proceedings underway in New York for NII Holdings, Nextel’s parent company. NII said a competitive bidding process will need to be held under court supervision, and regulatory approval in Mexico is also needed. The transaction is expected to close by mid-2015.

After the AT&T–Iusacell deal was announced, we wrote that AT&T, in its quest for dominance in the Mexican market, had two options ahead: To buy up the US $17.5 billion worth of assets that América Móvil was selling off, or to buy Nextel. By choosing the latter option, the U.S. giant has accomplished several things. First, clearly, it has spent far less money while still gaining a substantial asset in terms of network. Second, it has placed itself in a more advantageous position with regard to impending regulatory scrutiny, because the size of the América Móvil divestment is so large and would face stiffer headwinds. Third, and most important, if the deal is approved, AT&T will have given itself the reach to surpass Mexico’s number-two operator, Movistar, and potentially challenge top operator América Móvil. Nextel’s network covers 76 million in a nation of 120 million, which will make a major difference in the capacity of the AT&T–Iusacell combined entity to compete in the marketplace. The fact that Nextel is part of a bankruptcy sale is something of a drawback in this deal, but that may be a small price to pay in light of the gigantic cost savings versus acquiring América Móvil’s assets.

AT&T’s ambitions go well beyond dominating the Mexican market; the operator intends to unify its U.S. and Mexican networks and create a transnational integrated market. Considering the vast numbers of Mexican nationals living and working in the U.S. and needing to be in contact with family and friends in Mexico and also to remit money to Mexico, this looks to be a major opportunity for revenue.

The above item appeared in a recent issue of The Tarifica Alert, a weekly resource that analyzes noteworthy developments in the telecoms industry from around the world. To access all of the latest articles and issues or to speak with the research team: http://www.tarifica.com/contactus.aspx