AT&T closes Nextel Mexico buy

01-06-2015 | Global Updates

AT&T on Thursday announced that it has completed the acquisition of Mexican mobile operator Nextel. The final purchase price came in at US$1.875 billion, less around $427 million in net debt and other adjustments, the telco said.

In order to close the deal, AT&T needed U.S. bankruptcy court approval, because Nextel's parent company NII holdings filed for Chapter 11 bankruptcy protection in September last year. The firm reached a restructuring deal with creditors in November and revised it in March to take into account the AT&T transaction.

AT&T also required – and secured – the green light from Mexican regulator Ifetel, or IFT. "Swift action by IFT, aided by recent regulatory reform by the Mexican government, has created a positive climate for AT&T to invest significantly in Mexico," the U.S. operator said, in a statement.

Indeed, AT&T agreed to buy Nextel in January with a view to incorporating the operator and its assets into its planned pan-North American service area. It paid $2.5 billion for Nextel's largest domestic rival Iusacell earlier this year.

The competitive landscape is changing in Mexico, in no small part due to the regulator's decision to impose asymmetric regulations on dominant player America Movil a year ago.

The incumbent quickly announced plans to sell a portfolio of unspecified assets that would both let a new player into the market and at the same time reduce its market share to below 50%, thereby allowing it to sidestep the new rules and giving it a stronger chance of winning a licence to provide TV services.

The arrival of AT&T has changed America Movil's view of its home market and as such it is re-examining its options, Hajj explained.

AT&T aims to create a single service area covering its U.S. and Mexican networks, and serving 400 million customers and businesses.

AT&T was widely tipped as a buyer of those assets, but its decision to buy Iusacell put it out of the running.

And last week America Movil CEO Daniel Hajj revealed that his company is still keen to reduce its market share, but is now unlikely to sell off any infrastructure or spectrum.

In January it named Thaddeus Arroyo as the new chief executive of Iusacell and of AT&T Mexico, and on Thursday it confirmed that he will lead the combined Iusacell and Nextel businesses.

TotalTelecom