AT&T set to continue Mexico expansion with Nextel acquisition

AT&T has announced it has entered into an agreement with NII Holdings to acquire its subsidiary Nextel Mexico for approximately $1.88 billion (less outstanding net debt). The move, which will increase AT&T’s Mexican subscriber base by three million if approved, comes shortly after the US telco completed its Iusacell buy.

Under the terms of the agreement, AT&T will acquire all of NII’s wireless assets in Mexico, including network infrastructure, spectrum licences, retail outlets and customers.

AT&T said it plans to merge Nextel with Iusacell, and claimed this will enable it to improve and expand its mobile internet service in Mexico quicker. As previously announced, the telco is in the process of creating a North American single service area covering the US and Mexico.

“The acquisition of Nextel Mexico will support AT&T’s plans to bring greater competition and faster mobile Internet speeds to the Mexican wireless market,” the operator said in a statement.

“AT&T plans to create the first-ever North American Mobile Service area covering over 400 million consumers and businesses in Mexico and the United States, and Nextel Mexico’s subscribers will be included.

NII’s CEO, Steve Shindler said: “The transaction with AT&T ensures that customers of Nextel Mexico will continue to be served by a high quality telecommunications company committed to providing innovative products, services and solutions to the market.

As well as the usual regulatory scrutiny both in US and Mexico, the deal is also subject to bankruptcy auction and approval by the US Bankruptcy Court (Southern District of New York), which is overseeing NII’s restructuring. NII Holdings, which has operations in Argentina, Chile, Brazil and Mexico, filed for bankruptcy protection in September.

“We believe that the sale of Nextel Mexico represents an opportunity to reduce our operational risk, deliver value to our stakeholders and provide the liquidity that will position us to emerge from Chapter 11 reorganization with a healthy balance sheet and fund our business plan in Brazil,” Shindler said.

“The sale also allows our Mexico team to continue to grow and thrive, capitalizing on the opportunities in the Mexican telecom market with the support of one of the largest telecom companies in the world.”

AT&T said based on its recent positive experience in Mexico with Iusacell, it expects the deal to close by the end of the first half of 2015.