American wireless carrier AT&T will challenge Carlos Slim’s telecom business with the $2.5 billion acquisition of Iusacell that serves nearly 8.6 million subscribers in Mexico.
AT&T says Mexican telecom regulatory reforms, population, middle class and economy prompted the wireless carrier to invest in Iusacell and Unefon brand names that reach Mexico’s nearly 120 million people.
Iusacell telecom network covers 70 percent of Mexico’s population and AT&T will expand network to millions more.
The acquisition of Grupo Salinas, a struggling third-place mobile-phone operator, will enable A&T to focus on mobile broadband in Mexico that has the second largest economy and one of the highest per capita GDPs in Latin America.
Randall Stephenson, AT&T chairman and CEO, said: “Iusacell gives us an opportunity to create the first-ever North American Mobile Service area covering over 400 million consumers and businesses in Mexico and the United States.”
AT&T will benefit from Iusacell’s 3G wireless network based on GSM/UMTS technology that AT&T uses in the United States. Iusacell owns between 20 and 25 MHz of 800 MHz spectrum, primarily in the southern half of the country, including Mexico City and Guadalajara, and an average of 39MHz of PCS spectrum nationwide.
The acquisition will happen after Grupo Salinas, the current owner of 50 percent of Iusacell, closes its announced purchase of the other 50 percent of Iusacell from a third party.
As part of the deal, Iusacell’s Total Play business, including the network assets to support pay TV and wireline broadband services will be spun out to Grupo Salinas’ existing shareholders prior to AT&T closing its acquisition of Iusacell.
AT&T takes on Carlos Slim’s telecom business
America Movil, Carlos Slim’s telecom business, is looking to sell parts of its wireless and landline assets to reduce its dominant market share and address telecom regulatory issues. America Movil, which controls nearly 70 percent of Mexico’s telecom market, was in touch with AT&T to sell $17.5 billion worth of its assets.
AT&T is awaiting final approval for buying DirecTV in a deal valued at $48.5 billion. This will also help AT&T to expand in Mexico and compete with Carlos Slim, a former partner of the American telecom venture.
It is believed that AT&T will continue to pursue its discussions with American Movil to buy its telecom assets, though the company does not confirm now.