AT&T Unlikely to Buy AMX Assets?

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Before AT&T announced their deal to purchase Nextel Mexico, many thought the company would acquire America Movil’s (AMX) assets. Some believe it’s still a possibility, but Jonathan Chaplin at New Street Research says there’s only a slight chance. “Previously we thought AT&T would likely buy assets and / or subs divested by AMX; we now think this is less likely. The addition of Nextel will give AT&T a strong spectrum position in Mexico, with over 100MHz of low and mid-band spectrum nationwide; however, the market opportunity is too small to materially impact AT&T’s FCF [free cash flow], even if they are wildly successful,” Chaplin wrote. This transaction also made Chaplin and his team cautious on AMX as they don’t know who will buy enough of the assets to eliminate the asymmetric regulation. “If AT&T can effectively capitalize on their spectrum position and ability to offer an integrated service across the U.S. and Mexico, this market could be accretive to FCF over time; however, the market is too small in the context of AT&T’s existing business to materially impact the value of AT&T positively or negatively,” Chaplin explained. 

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