The second-largest U.S. mobile service provider
AT&T Inc.
(
T
) and the Mexican telecom giant
America Movil
(
AMX
) entered into a contract to share each other networks.
The partnership allows both companies to expand and enhance
their respective networks in key markets throughout the world,
including growth regions like Latin America, Asia and the Middle
East.
As per the terms of the agreement, AT&T will expand its
presence in Latin America using America Movil networks in 15
countries. Initially, AT&T will offer virtual private network
services to its multinational clients operating in Latin America
and gradually expand its offering to a host of advanced Internet
services.
On the other hand, America Movil will use AT&T's global
network infrastructure to provide Internet services in the U.S. and
rest of the world. Further, the two companies will be able to
integrate the latest technologies into their networks.
AT&T is working on a number of strategies to tap
opportunities in the wireless data market. The company is steadily
broadening its global footprint to strengthen its competitive
position against its major rival
Verizon Communications
(
VZ
). AT&T launched its 4G Long-Term Evolution wireless networks
in the U.S. in September. Currently, the company covers nine
markets and aims to reach 15 markets by the end of this year. In
addition, AT&T is taking advantage of the rapidly evolving
managed hosting and cloud services businesses. The company also
seeks to enter into the hotel WiFi (wireless broadband)
business.
Expansion is also part of America Movil's growth story. The
Mexican telecom heavyweight focuses on spreading in Latin America
and overseas through several acquisitions and partnerships. This
effort has strengthened its competitive position and would also
boost its future profitability. Further, America Movil is gaining
share from the increased penetration of 3G data services in Mexico.
The company also looks to expedite revenue growth with the launch
of its 4G mobile services in Mexico next year.
We are maintaining our long-term Neutral recommendation on both
AT&T and America Movil with the Zacks #3 (Hold) Rank.
AMER MOVIL-ADR (
AMX
): Free Stock Analysis Report
AT&T INC (
T
): Free Stock Analysis Report
VERIZON COMM (
VZ
): Free Stock Analysis Report
Zacks Investment
Research