AT&T announced a $2.5 billion deal to acquire Mexican operator Iusacell, in a move set to shake-up the country’s mobile market.
Iusacell, which offers services under the Iusacell and Unefon brand names, has a network which covers around 70 per cent of Mexico’s approximately 120 million people. It is the country’s third largest mobile operator with 8.5 million connections (trailing America Movil on 70 million and Telefonica on 21 million). The US player said it “plans to expand Iusacell’s network to cover millions of additional customers and businesses in Mexico”.
While AT&T’s interest in the Mexican market has been reported previously, the company had also been linked with the assets to be offloaded by America Movil in the country – with AT&T and America Movil having a long history together.
Presumably the Iusacell deal makes this a less likely option, unless AT&T also attempts to buy both sets of assets to drive in-market consolidation. With America Movil’s asset disposal the result of regulator action designed to improve competition in the market, it is not clear what its stance would be on such a transaction.
“Iusacell gives us a unique opportunity to create the first-ever North American Mobile Service area covering over 400 million consumers and businesses in Mexico and the United States. It won’t matter which country you’re in or which country you’re calling – it will all be one network, one customer experience,” said Randall Stephenson, chairman and CEO of AT&T.
In addition to noting that the country “is still in the early stages of mobile internet capabilities and adoption, but customer demand for it is growing rapidly”, AT&T also said that “recent changes to government policies in Mexico have created a friendly climate for foreign investment”.
Under the terms of the proposed deal, AT&T will acquire all of Iusacell’s properties, including licences, network assets, retail stores and subscribers. It will happen after Grupo Salinas, owner of Iusacell, closes its purchase of the 50 per cent of the company it does not own.
Iusacell has a 3G network based on the same WCDMA technology used by AT&T. It will continued to be headquartered in Mexico City.