AT&T heads south of the border once again; agrees USD1.875bn Nextel Mexico takeover

27 Jan 2015

AT&T Inc has reached an agreement with NII Holdings to buy Nextel Mexico for USD1.875 billion, with the deal underlining the US telco’s strategic shift into the Mexican market. AT&T plans to integrate Nextel Mexico with fellow Mexican operator Iusacell, which it agreed to buy late last year in a deal valued at USD2.5 billion. The deal for Nextel Mexico includes all of NII Holdings’ wireless properties in the country, including network assets, retail stores, three million subscribers and spectrum licences. AT&T said it expects the deal to close in the middle of the year. The sale is subject to a bankruptcy auction and approvals by US Bankruptcy Court in the Southern District of New York, which is overseeing NII Holdings’ restructuring.

According to TeleGeography’s GlobalComms Database, as at 30 September 2014 Nextel claimed a meagre 2.8% share of the Mexican wireless market, behind Iusacell (8.4%). Taken together, the enlarged post-merger entity would occupy 11.2% of the wireless sector. Second-placed player Movistar claimed a 20.1% market share at end-September, while America Movil (AM)-backed market-leader Telcel (68.8% as of 3Q14) has committed to reducing its market share below 50%, thus avoiding regulations that apply only to dominant players, and cease being a ‘preponderant economic agent’. With AT&T now effectively out of the running for the spun-off AM assets, suitors are likely to include Softbank Corp of Japan, Bell Canada and China Mobile; as things stand, the new operator would have a nominal 18.8% share of the wireless market.

TeleGeography notes that Nextel Mexico is the third NII Holdings unit to be sold in under two years; in August 2014 NII Holdings has struck a deal to sell its Chilean subsidiary to a joint venture between US private equity firm Optimum Advisers, Argentinean media company Grupo Veintitres and UK-based investment house ISM Capital. Previously, in April 2013 Nextel Peru was sold to Chilean operator Entel for around USD400 million. Following the closure of the Mexican divestment, the company will operate just two subsidiaries, Nextel Argentina and Nextel Brasil.

Mexico, AT&T, Iusacell (inc. Unefon), Nextel de Mexico, NII Holdings