Mexico news special: Axtel agrees USD500m cash and debt deal for Avantel

27 Oct 2006

Mexico’s largest alternative telephony operator Axtel has agreed to acquire rival Avantel for USD500 million in cash and debt, the company said in a statement. Axtel has long been in the market to expand its business via acquisitions and mergers, and sources close to the company claim a takeover of Avantel is ‘practically done’. As part of the deal, Axtel will absorb Avantel debts of USD190 million. Avantel, co-owned by domestic financial group Banamex and MCI of the US (formerly WorldCom, now part of Verizon), has struggled to make an impact in the local fixed line market, but does have a strong presence in the domestic and international long-distance sectors. According to El Financiero, Avantel has invested around USD2 billion in its networks and services since launching in 1997, but income has steadily declined from USD700 million in 2000 to USD410 million in 2005, though the company said it expects to see the figure rise to USD515 million in 2006. Upon completion of the acquisition, Axtel said it will provide local and long-distance telephony, broadband and data services to more than 750,000 customers.

Mexico, Axtel