Mexican mobile operators Iusacell and Unefon have announced long anticipated plans to merge in a bid to provide a stronger challenge to market leaders Telefónica Móviles México and Telcel. The merger will create a company with more than 3.3 million customers and a nationwide footprint. Iusacell and Unefon already share some of their CDMA infrastructure, including high speed CDMA2000 1xEV-DO networks.
There has long been speculation that Iusacell would eventually be merged with Unefon. Mexican tycoon Richard Salinas owns stakes in both companies through various subsidiaries, but a deal has been delayed by Iusacell’s financial problems. Iusacell, the larger of the two in terms of subscribers, filed for bankruptcy in mid-2003 and only completed the restructuring of USD350 million of debt on 28 August. Iusacell’s shares have more than doubled in value in the last six months on rumours of the merger, as well as on the company’s debt restructuring.
As a precursor to the deal, Salinas’ Unefon Holdings has agreed to increase its stake in Unefon from its current 44.4% to 100%. It has agreed to purchase 45.6% of equity from the Saba family for USD300 million in stock and cash, which will include the transfer of its 50% stake in wireless broadband provider Cosmofrecuencias to the Sabas. Following completion of the deal Unefon Holdings will launch a 60-day public offer for the remaining 10% of Unefon under the same terms.