AT&T Inc. (T), America Movil SAB de CV (ADR) (AMX): America’s Interest

AT&T Inc. (NYSE:T) is happily riding the latest wave of technological growth. There are number of popular smartphones available with full 1080p resolution. These phones can stream full HD videos and this will only increase demands for AT&T’s data services. In Q1, 2013 data revenue was up a full 21% yoy. By the end of 2013 management expects 90% of AT&T’s first major 4G LTE deployment to be completed, further growing data revenue.

With an estimated 2013 EPS of $2.51, AT&T is trading at a forward P/E ratio around 15. As an investment it is more attractive than America Movil with a more stable regulatory environment. Its total debt to equity ratio of 0.76 is also a step below America Movil’s 1.63. AT&T’s ROI of 4.7% isn’t amazing, but its profit margin of 8.9% is healthy enough.

The Struggling Step Child

NII Holdings, Inc. (NASDAQ:NIHD) is active in Mexico with its Nextel brand. The company is stuck a generation behind its competitors and its pain will continue. It recently announced plans to sell Nextel Peru. This sale will help to finance its 3G roll out in Brazil and Mexico. The company faces a very difficult battle. Competitors like American Movil are already introducing their 4G networks.

Mexico retained its position as the largest single country based on number of subscribers. In Q1, 2013 it was able to add 15.9 thousand new subscribers for a total of 3.9 million subscribers. Together Brazil and Mexico provide the majority of the company’s 11.5 million subscribers. With competition in the Mexican market to increase, old technology and a large total debt to equity ratio of 2.1, NII Holdings, Inc. (NASDAQ:NIHD) is best avoided.

Conclusion

Mexico continues to grow and its citizens continue to buy data-intensive smartphones. The telecom reform law has opened up competition for domestic and foreign competitors. America Movil SAB de CV (ADR) (NYSE:AMX) will suffer from the increased competition, but it is a good company to watch as the market may overestimate negative trends. NII Holdings is struggling with older technology. AT&T has interests in the Mexican market, but its growing data sales in the U.S. that make it the most attractive investment.

The article Is Mexico The New Land of Telecom Opportunity? originally appeared on Fool.com and is written by Joshua Bondy.

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