AT&T Inc. finally capitulated in Mexico. After a dozen years trying to expand in the country, the Dallas-based telecom provider announced last week the divestment of its local operations, effectively exiting the Latin American market altogether. On Oct. 13, the company said it had agreed to sell AT&T Mexico to Grupo Televisa SAB and Fintech Holdings Inc. for $2 billion in cash as it focuses on its fiber and 5G businesses in the US.

The move offers two big lessons for corporate executives, policymakers and regulators interested in the region. First, being a top American company doesn’t guarantee success in complex and idiosyncratic developing markets like Mexico’s. Assuming that strength in the US will carry over to Latin America’s biggest countries is short-sighted. These are tough markets, where locals hold key advantages in knowing their clients firsthand, understanding — and sometimes helping to shape — regulations and the all-important political environment. AT&T should have realized from the start that it was racing at a disadvantage.

Second, the exit of one of the world’s biggest telecom companies is undoubtedly a loss for Mexico. Televisa and Fintech Holdings, headed by billionaire David Martínez, may well turn out to be better service providers to Mexican customers and finally mount a challenge to Carlos Slim’s mobile-phone empire. But regardless of that, the absence of any rival offer from another big international group shows how unattractive the regulatory environment has become for foreign companies in certain sectors.

That should worry anyone who cares about having top players competing in most markets. Let’s not forget that Spain’s Telefonica SA also sold its Mexican unit earlier this year, in that case to a private consortium for $450 million.

The AT&T retreat is, in a way, the consequence of Mexico’s failure to create a competitive telecommunication market. The concrete reforms launched under President Enrique Peña Nieto from 2012 were meant to force Slim’s América Móvil to share infrastructure with rivals and reduce its market share. They stalled under the nationalist governments of Andrés Manuel López Obrador, who took office in 2018, and his successor Claudia Sheinbaum.

The most emblematic of these counter-reforms was last year’s elimination of the Federal Telecommunications Institute, the autonomous body created in 2013 to crack down on anticompetitive behavior. The government replaced it with an agency that ultimately answers to the presidency. Fair or not, that signaled to investors that the industry would be regulated with more political than technical bias, something that tends to scare foreign firms. Those who believed Mexico’s longstanding pledges of seeking a more competitive environment were right to be disappointed.

None of this is to deny that AT&T made several strategic mistakes in Mexico. For a start, it parachuted its first CEO into the country in 2015 without him speaking Spanish or having significant experience in Mexico. One of his first moves was to brashly claim in an interview that the company would be leading the market within 10 years. It’s easy to imagine that didn’t sit very well with Slim, whose América Móvil had paid AT&T hefty dividends for years as part of an equity investment that only ended months before the US company decided to re-enter Mexico by itself.

AT&T went through two more CEOs before finding, in 2020, a local executive with both deep local understanding and political clout. By then, losses were piling up, AT&T’s share of Mexico’s mobile market was still nowhere near challenging América Móvil’s Telcel and the company’s international expansion stopped being a priority. Despite more than $10 billion of accumulated investment and building an innovative network that helped bring prices down, the company managed to post its first full-year operating profit only in 2024 and capture just 16% of wireless subscribers, compared with América Móvil’s 58% market No doubt, this is also testimony to the fantastic execution capacity of Slim & Co., who knew how to face the AT&T challenge and navigate the changing regulatory waters from a position of strength.

They taught AT&T a lesson in how to do business in the country and another in .

But the bottom line remains: Mexico clearly has a problem fostering competition on equal terms in more regulated industries, from energy to telecoms and transportation — a clear disincentive for otherwise enthusiastic foreign firms. The exit of Iberdrola SA this year after several clashes with López Obrador and Citigroup Inc.’s slow divestment of Banamex are examples of those shortcomings. The rumored approval of the merger of two low-cost airlines announced last year, which would give them roughly 70% of Mexico’s passenger airline market, would be another step in the wrong direction.

For all its mistakes, AT&T was also partly a victim of the latest political winds. A more dirigiste government doesn’t seem very interested in promoting more competitive, customer-facing markets in an industry that's changing dramatically. That’s a shame. Mexico needs more AT&Ts betting on the country, not fewer.