Market Overview

Morgan Stanley On AT&T Acquisition Of Lusacell

Share:

Morgan Stanley issued a research note Monday on the acquisition of Mexican wireless carrier Iusacell by AT&T Inc. (NYSE: T).

Lusacell, the No. 3 wireless carrier in Mexico, will be acquired for $2.5 billion.

According to analyst Simon Flannery, the “acquisition provides 20-25 MHz of 800 MHz spectrum, primarily in the southern half of the country, including Mexico City and Guadalajara, and ~39 MHz of nationwide PCS spectrum, covering ~70 percent of ~120M POPs.

“While 8.6M wireless subscribers represents ~10 percent market share, AT&T sees an opportunity to create a one-of-a-kind North American Mobile Service covering 400M+ POPs in Mexico and the United States. We believe that the transaction is consistent with recent comments on Mexico, and, along with DirecTV, may be part of a broader strategy in Latin America.”

The report noted that capex is now expected to be  about $18 billion in 2015, lower than the previous estimate of about $21 billion which “should improve the dividend payout ratio from ~90 percent of free cash flow in 2014e to 70 percent / 75 percent of free cash flow in 2015e.”

Flannery concluded that the “transaction reinforces the competitive nature of the US wireless industry, as AT&T looks for growth outside of the United States. We believe that this transaction is positive for American Tower Corp, which generates ~9 percent of their site leasing revenue from Mexico.”

The firm maintained and Equal-weight rating on AT&T with a $36 price target.

AT&T recently traded at $35.12, up 0.57 percent.

Latest Ratings for T

DateFirmActionFromTo
Mar 2019UpgradesMarket PerformOutperform
Dec 2018UpgradesNeutralBuy
Dec 2018UpgradesMarket PerformOutperform

View More Analyst Ratings for T
View the Latest Analyst Ratings

Posted-In: Morgan Stanley Simon FlanneryAnalyst Color Analyst Ratings

 

Related Articles (T)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
SKXMaintains44.0
HYMaintains66.0
MSFTMaintains160.0
SKXUpgrades
WLTWMaintains208.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Trading Daily
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com

​Mid-Morning Market Update: Markets Edge Higher; Dean Foods Posts Narrower-Than-Expected Loss

Sothebys Spikes On Revenue Beat, New Auctions