NEW YORK (TheStreet) -- Wireless communications giant AT&T (T) - Get Report said Monday that it is buyingNextel Mexico, owned by NII Holdings (NIHD) - Get Report , for about $1.88 billion, minus the company's debt, another reason that investors should buy the stock ahead of the release of fourth-quarter and 2014 earnings Tuesday.
AT&T continues to look for ways to create value and better diversify its business. In this case, Nextel Mexico will give AT&T the rights to all the companies that operate under the Nextel Mexico name.
This deal also gives AT&T all the wireless properties in Mexico that are held by NII Holdings. The deal is expected to close in the middle of the year.
AT&T stock closed Friday at $33.37, down 1.24% and is down 0.65% for the year to date, in line with the performances of the Dow Jones Industrial Average (down 0.84%) and the S&P 500 (down 0.34%).
But with shares down 1.27% for the trailing 12 months, compared with gains of 9% and 12% for the Dow industrials and S&P 500, respectively, investors are frustrated. That doesn't mean, however, that AT&T isn't creating value.
In other words, what AT&T reports Tuesday becomes secondary. What is more important to focus on is where the company is going.
AT&T, which competes withSprint (S) - Get Report and Verizon (VZ) - Get Report , already said via a filing with the Securities and Exchange Commission that it will record a fourth-quarter non-cash charge of $10 billion. Out of that total, $7.9 billion is related to changes in its pension and retiree benefit plans, while $2.1 billion is for copper assets that AT&T no longer needs.
The company also said that none of the charges will affect its segment operating margin.
The market is focusing too much on what Sprint and T-Mobile (TMUS) - Get Report are doing in terms of aggressive promotions and not enough on what AT&T is doing to offset potential decline in wireless growth. Its Nextel Mexico is one example.
Plus, AT&T is moving away from its phone-subsidizing model to a business that focuses more on long-term customer contracts.
This transition, which will help AT&T generate higher recurring revenue, will take some time. And because of this, Tuesday's fourth-quarter revenue results will likely be affected, as was the case in the previous quarter.
In addition, the stock is cheap, trading at just 10 times trailing estimates. That is half the average price-to-earnings ratio of companies in the S&P 500.
So at about $33 a share, there are plenty of reasons for investors to be patient, especially when the possible headwinds are already priced into the shares.
Add in its deal for Nextel Mexico and its excellent yield of 5.63%, which more than doubles the average 2% dividend paid out by companies in the S&P 500, and AT&T deserves more time to execute and create value for shareholders.
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.