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Summary

AT&T’s aggressive market entry into Mexico together with its previous acquisition of DirecTV has spurred a wave of speculation across the telecoms market in Latin America about AT&T investing in other countries. But what are the realities, challenges, and opportunities for AT&T in the region?

Acquisitions are the path for AT&T in Latin America

DirecTV is the leading pay-TV operator in Latin America, and it offers broadband via TD-LTE in Brazil and Colombia. However, if AT&T wants to expand into other markets, it will need to invest to acquire spectrum and build out infrastructure.

But the question is whether AT&T really wants to expand its Latin American presence beyond Mexico. Even though Mexico is the second-largest country in the region, it still has opportunities in fixed and mobile broadband. Besides, the vast community of people in the US with ties to Mexico is an attractive prospect, making a compelling business case for AT&T.

The business case for the rest of the region, however, is not as clear given that countries such as Brazil, Argentina, and Colombia have higher penetration rates and more competitive markets than Mexico, not to mention diminishing growth rates. And, even though DirecTV is an important TV player in these markets, it lacks extensive infrastructure.

If AT&T does decide to expand further into Latin America and decides to buy spectrum, it would mean taking a long time to build the network, unless it is coupled with acquisitions.

ETB in Colombia and Oi in Brazil?

Acquisitions would be a fast track, a path made easier by the weakening of currencies in the region and by the existence of attractive targets, among them ETB in Colombia and Oi in Brazil. ETB is in the middle of a modernization plan that saw it investing in FTTH, IPTV, and LTE, the company is owned by the City of Bogota. Then there is Oi, which is an incumbent in Brazil, but it has a large debt that has plagued the company for the past few years.

Appendix

Further reading

“Brazil could be bound for consolidation in 2015,” TE0001-000908 (January 2015)

Mexico Update,TE0001-000959 (March 2015)

Author

Ari Lopes, Principal Analyst, Latin America

ari.lopes@ovum.com

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