AT&T Mexico is unlikely to take part in the country's upcoming spectrum auction.

Reuters reported that the carrier is set to sit the auction out due to high costs.

Spectrum costs in Mexico are among the highest in the world, due to the structure of annual usage fees.

This has disadvantaged telcos such as US-based AT&T and Spain's Telefónica, which operates in Mexico as Movistar, as carriers attempt to compete against the dominance of Carlos Slim's Telcel.

"With the current spectrum costs it is very probable that this auction will again be left deserted, as happened in the last auction," a source at AT&T told Reuters.

The source added that the carrier has outlined its concerns around spectrum to the Mexican government previously, though it was ignored. The US trade office has also noted the issue of spectrum, and is pushing for lower costs in an effort to challenge Telcel.

A previous spectrum auction in 2021 saw just three of 41 blocks of spectrum sold, to AT&T and Telcel.

AT&T previously returned part of its spectrum in 2022 and another part in 2023.

The timing of the report comes a few days after American Tower CEO Steven Vondran revealed the tower company is in a dispute with AT&T Mexico over tower rental costs.

Vondran said that the mobile carrier has been withholding tower rents since the start of the year.

AT&T entered the market back in 2014 after acquiring Grupo Iusacell SA for $2.5 billion, before snapping up the Mexican business of NII Holdings a year later for $1.9bn, merging the two units to create AT&T Mexico.

Last month, reports suggested that the telco was looking to sell up in Mexico for around $2bn.