Storm clouds gathering over Iusacell

25 Apr 2005

The problems afflicting Mexico’s fourth largest mobile operator Iusacell continue to grow causing concern over the long term future of the cash-strapped company. Despite having received 10MHz of additional spectrum for seven regions from the regulator Cofetel, effectively giving it nationwide coverage, the cellco’s money problems are making it hard for it to invest in new services to help boost subscriber numbers. Iusacell is in the throes of renegotiating its USD800 million of debt and has already defaulted on USD150 million to pay off senior notes due in 2004. It has another USD350 million due next year and the added burden of a USD266 million syndicated loan. On top of this, the cellco must pay USD5.2 million plus annual maintenance fees for its additional frequency, and it has scarce resources – perhaps less than USD362,000 in available cash – with which to upgrade and expand its 3G network, with few opportunities for securing extra credit. At the end of 2004 Iusacell had around 1.46 million subscribers, a market share of just 5%.

Mexico, Iusacell (inc. Unefon)