Mexico Could Account for 20% of Growth for AT&T (T) in 2018 - UBS

UBS analyst, John Hodulik, sees AT&T's (NYSE: T) Mexican wireless strategy as an attractive opportunity that can be captured with a reasonable amount of invested capital and relatively low risk.

AT&T can begin to see benefits from its Mexico strategy as early as 2017, when it will begin to contribute to EBITDA and earnings growth and UBS expects revenues in Mexico to double by 2018 to $3.6B.

In 2018, they expect it to comprise just 2% of consolidated revenue and 1% of EBITDA/EPS but generate more than 20% of top and bottom line growth. They believe returns on invested capital are likely to be attractive as well given the relatively low cost of entry and ongoing "asymmetric" benefits.

UBS thinks shares are attractive given the historically low valuation and expected earnings growth 2015- 2018.

No change to Buy rating or $42 PT

For an analyst ratings summary and ratings history on AT&T click here. For more ratings news on AT&T click here.

Shares of AT&T closed at $33.04 yesterday.

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