DirecTV Acqusition Pits AT&T Against Former Partner America Movil

AT&T appears set to take on its one-time partner America Movil in Carlos Slim’s own stronghold, as the US telecom giant has announced plans to acquire satellite broadcaster DirecTV for $48.5 billion. AT&T is now selling its 8% stake in America Movil to fund the acquisition.

Although DirecTV is mainly a pay-TV service provider, it has recently widened its mobile broadband footprint across the region. It is already providing mobile broadband services in Brazil and Argentina and is preparing to introduce the service in Colombia this quarter.

Analysts say AT&T’s latest strategy will kick off a fierce competition among wireless operators to sign up more customers in both the United States and Latin America. Analysts say that selling stakes in America Movil is necessary in order for AT&T to comply with regulation regarding its acquisition of DirecTV.

In a conference call with analysts on Monday, AT&T CEO Randall Stephenson reportedly stated that America Movil would soon become his competitor. AT&T’s America Movil stake is worth $6 billion, analysts estimate.

With 246 million wireless subscribers, America Movil – whose subsidiaries include Telmex, Embratel and Claro – is no doubt a dominant telecom giant in Mexico and several other countries across Latin America. In Mexico it controls 70% of the mobile business and 80% of the fixed-line market.

But Slim’s firm is now under government pressure to reduce its dominance in Mexico, where British telecom firm Virgin Mobile is about to join the race to win over new wireless customers. For years, Slim has resisted calls to reduce his dominance of the Mexican phone industry, but now analysts believe AT&T might do what others have been unable to.

With over 91,000 miles of fiber-optic network and 12 data centers, America Movil has operations in 18 countries in the Americas, more than 30 million fixed lines, 18 million fixed broadband clients and more than 17 million television subscribers, and the carrier’s submarine cable has a capacity of more than 90 terabytes.