AT&T to Acquire Mexicos Iusacell

By Josh Long

In its second recent large acquisition in Latin America, AT&T has agreed to acquire Mexican wireless provider Iusacell for $2.5 billion from Grupo Salinas.  

AT&T will pick up Iusacell’s wireless properties, including roughly 8.6 million subscribers. Iusacell offers wireless service under the Iusacell and Unefón brand names with a network that covers 70 percent of Mexico’s population (120 million), AT&T said.

Dallas-based AT&T expects the deal to close in the first quarter of 2015.

“The companies believe that the synergy potential from the combination would include: customer additions from being able to create a one-of-a-kind North American Mobile Service area which will cover more than 400 million consumers and businesses in Mexico and the United States; economies of scale through combined purchasing opportunities; and the sharing of best practices,” AT&T stated in a press release.

Grupo Salinas currently owns half of Mexico City-based Iusacell, and AT&T needs Grupo Salinas to close its acquisition of the remaining half of Iusacell before AT&T can take over the wireless company. AT&T’s acquisition is subject to review by Mexican authorities, including telecom regulator IFT (Instituto Federal de Telecomunicaciones) and the National Foreign Investments Commission.

“Our acquisition of Iusacell is a direct result of the reforms put in place by President Peña Nieto to encourage more competition and more investment in Mexico,” AT&T chairman and CEO Randall Stephenson said in a statement. “Those reforms together with the country’s strong economic outlook, growing population and growing middle class make Mexico an attractive place to invest.”

In May, AT&T announced an agreement to acquire DirecTV for $49 billion. El Segundo, California-based DirecTV has significant operations in Latin America, with revenues there of $5.3 billion through the first nine months of the year.

“With DirecTV Latin America, this marks the second major international acquisition for the company this year and such expansion has been long rumored among investors, industry participants and the media,” Canaccord Genuity analyst Greg Miller said. “Recent regulatory actions could provide the opportunity to pair these two assets to create a strong, differentiated product offering with potential cross-border synergies.”