AT&T’s Mexico Bargains Might Cause Some Envy Among U.S. Clientsby
While direct comparisons are difficult, differences are stark
Carrier says cost structure, regulations affect prices
AT&T Inc.’s U.S. wireless customers might be tempted to try signing up for its service in Mexico instead. South of the border, AT&T offers a 6-gigabyte data, voice and text plan -- including full coverage in the U.S. -- for a whopping 69 percent less, in dollar terms.
OK, so it’s not that simple. Each market has different regulations and economic conditions, and plan configurations can make comparing prices across the border more complex. But looking at the offerings side-by-side does offer insight into the competitive conditions in the neighboring countries’ wireless markets.
AT&T’s $25 plan in Mexico goes for $80 in the U.S. for an individual phone user. They both include unlimited domestic calls and texts. The Mexican plan even includes free roaming in the U.S. and Canada, while the American plan offers coverage in the U.S. only.
In the U.S., users can sign up for family plans and share buckets of data -- a couple could get 6 gigabytes of data for $100, or $50 per person. That’s still twice as much as they would pay in Mexico, where they’d get 12 gigabytes total.
The price differences favor Mexico up and down the range of AT&T’s offerings in both countries; you can get a 16-gigabyte plan for $110 in the U.S. or a 16.5-gigabyte plan for about $72 in Mexico.
In the U.S., AT&T is the second-largest mobile-phone provider, battling upstarts like T-Mobile US Inc. while trying to preserve its profit margin of almost 50 percent for wireless service. In Mexico, AT&T is the upstart, challenging entrenched market leader America Movil SAB, controlled by billionaire Carlos Slim. After a telecom regulation overhaul three years ago, Mexican consumers saw a 17 percent decrease in costs, while Dallas-based AT&T came in with aggressive offers to chip away at America Movil’s lead.
“AT&T is trying to gain market share, so it can justify having lower prices here since it’s trying to win new clients,” Corporativo GBM SAB analyst Carlos de Legarreta said in a phone interview, though he cautioned a direct comparison is too simplistic.
AT&T says it creates its prices with the local markets and the local competitive landscape in mind. “Our cost structure and the regulatory environments of individual countries can also have an effect on pricing,” the company said in an e-mailed statement. AT&T doesn’t disclose its operating profit margin for Mexican wireless service.