New Street Research Travels to Mexico

Soomit Datta, who covers Latin America for New Street Research, recently met with carriers and regulators in Mexico. Datta noted that after AT&T enters the market, the Instituto Federal de Telecomunicaciones (IFETE) will breathe a sigh of relief as they can claim regulatory reform is working, given meaningful capital investments from a competitor are now a reality once Iusacell and Nextel (assuming this completes) are knitted together. “Without AT&T, this would be a much harder claim to make, given that in reality AMX’s share continues to increase. More broadly, IFETEL felt telecom was the only reform of the new government’s (oil & gas, taxes, other infrastructure) which can justifiably be claimed to have been successful.” Datta also explained that with AT&T’s entrance, it’s unlikely that the AMX assets will be sold. “I think a fair read is that AMX were pretty surprised at AT&T’s move, being opportunistic in so much as Iusacell suddenly came up for sale. The narrative from AMX has subsequently changed, talking more about running the business as a preponderant operator and how this is not such a bad thing. AMX definitely won’t sell to TEF or an existing Mexican operator, and the likelihood of an international operator wanting to compete against AMX and AT&T is pretty slim in our view. We have $1 in our AMX target for asset disposals.”