AT&T Inc. (NYSE:T) is looking for more investment opportunities in the high-growth Latin American region after a potential acquisition agreement with DIRECTV (NASDAQ:DTV). The Latin American market is growing at least 10 times quicker than the U.S markets.
The acquisition of DIRECTV (NASDAQ:DTV) is on its verge and is likely to proceed after a green light from the State Attorneys. This deal would allow AT&T to inherit DirecTV subscribers throughout Latin America, especially in Mexico and Brazil. It will be one of its most effective expansion steps in over a decade, which is deemed as necessary to ensure growth of the company.
According to Jonathan Chaplin, New Street Research, the telecommunication giant would need more assets around the Southern border to spur growth outside the U.S. Chaplin further added, “DirecTV has a great, competitive product in Latin America, but they will need broadband capabilities.”
John Stankey, Strategy chief of AT&T Inc. (NYSE:T), was motivated with the new Mexican law to increase competition in the telecommunications industry and it would help further investments. America Movil SAB de CV (ADR) (NYSE:AMX), which commands nearly 80% landline market in the region, has approached the company to spin off wireless and landline assets worth $17.5 billion.
Stankey added that the availability of in-hand cash is the reason why AT&T could afford to explore potential deals without being concerned about the timing. When asked about the growth opportunities in Mexico, Stankey added, “If you step back and think about Mexico, it is a place that’s prone to move into an incredible growth cycle.”
According to Stephen Sweeney, Elevation LLC, the breakup of America Movil SAB de CV (ADR) (NYSE:AMX) would open new service opportunities for AT&T. He added, “AT&T is already buying TV subscribers in Latin America, so if America Movil is divesting landline and wireless assets in Mexico, then AT&T can then buy those and offer a triple or even a quad play in Mexico.”
Penetrating into the Latin American market is the best chance in front of AT&T and it is quite likely to look across other acquisition options in near future.
This article has been written by Prakash Pandey and edited by Serkan Unal.