As a result of the DirecTV purchase, AT&T has been forced to sell its remaining stake in Carlos Slim’s America Movil conglomerate in order to ease regulatory concerns ahead of the completion of the purchase, which is expected sometime next year. The sale of the stake, estimated at 8% of America Movil for $6 billion, will cut AT&T’s ties with the holding company that stretch back to the early 90’s, when the Mexican telecom industry was first privatized and mobile communications were in their infancy.
What this means for America Movil going forward has yet to make itself readily apparent, as the Tracfone brand heavily relies on AT&T as a key reseller operating multiple brands as well as being a virtual operator itself. Currently, America Movil operates Tracfone in the US and resells access to AT&T’s network under multiple brands including Straight Talk and Telcel America.
AT&T had previously sold off smaller percentages of its stake in America Movil prior to this sale, with the company selling off its most recent percentage in April, but this is the first time the carrier has sold off such a significant stake in its current form. AT&T also had two seats on the holding company’s board of directors prior to the sale and despite the steady reductions in the ownership stake over the past 24 months.
With the sale of the stake to ease the DirecTV purchase, it seems that AT&T sees a larger opportunity with DirecTV in the US for its integration plans than it does with its previous plans to expand into the Latin American mobile market with the help of America Movil, which were first announced in September of last year. Tellingly, America Movil has since confirmed that it could not re-purchase the stake, opting instead to remain at their current percentages for fear of increasing debt levels past already forecast levels.
Ironically, had AT&T not sold its stake in the conglomerate, the DirecTV purchase would have put it in direct competition with its former Latin American partner, as DirecTV Latin America is part-owned by the satellite TV provider through its partnership with Mexican television conglomerate Televisa, which also operates a competing mobile network in Iusacell through the Grupo Televisa holding company.