Potential reconfiguration in the telecom sector: AT&T contemplating exit from Mexico market
In the ever-evolving landscape of Mexico's telecommunications industry, the regulatory shifts this year, including the creation of the Telecommunications Regulatory Commission, have added to the operational complexity for foreign operators like AT&T.
Recent reports suggest that AT&T is considering selling its Mexican unit, with a potential sale price of over $2 billion. This move aims to recoup around 20% of the $10 billion investment made by AT&T, as the company struggled to gain significant market share in a market dominated by América Móvil.
If AT&T's business in Mexico is sold, its 23 million users would become part of the future buyer (assuming approval by regulators). This exit could lead to greater consolidation in the market, with América Móvil or other dominant players potentially benefiting.
Telefonica, another foreign operator, is reportedly in talks to sell its Mexican subsidiary Movistar Mexico, following similar regulatory and competitive pressures. This trend of global telecom companies exiting Mexico's challenging market environment could further entrench dominance by existing major players.
The state-owned Federal Electricity Commission launched mobile telephone and internet services in 2022, adding to the operational complexity. The competition between AT&T and América Móvil, controlled by billionaire Carlos Slim, has been testy over the years.
Since 2019, Telefonica has opted to lease AT&T's network rather than continue investing in its own infrastructure. The talks about these sales are confidential, and no final decision has been made.
If both AT&T and Telefonica exit Mexico, the telecom landscape could change dramatically. The competition between the major players could reduce, potentially resulting in less consumer choice and higher prices.
This shift reflects a trend where international firms prioritize investments in markets with stronger growth prospects and regulatory environments better suited to their strategies. For instance, AT&T is focusing on U.S. 5G and fiber network expansion.
In the medium term, the Mexican telecommunications market could face less competition and increased market concentration. Regulatory and structural barriers could further discourage new foreign entrants, potentially affecting consumer prices, service quality, and market innovation.
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