AT&T to Expand into Mexico with Purchase of Iusacell
AT&T announced Friday that it had had entered into an agreement to buy Mexican wireless provider Iusacell for $2.5 billion including debt, creating one of the largest wireless service operations in North America.
The second-largest carrier in the United States, AT&T is using this opportunity to purchase Iusacell from Grupo Salinas to expand southward into lucrative Latino markets. A combined AT&T and Iusacell network would cover 400 million U.S. and Mexican consumers and businesses. AT&T will acquire Iusacell after Grupo Salinas, which currently owns 50 percent of Iusacell, completes purchasing the other half of Iusacell.
"Mexico is still in the early stages of mobile Internet capabilities and adoption, but customer demand for it is growing rapidly," said AT&T chairman and CEO Randall Stephenson. "This is an opportunity for us to provide Iusacell the financial resources, scale and expertise to accelerate the roll-out of world-class mobile Internet speeds and quality in Mexico, like we have in the United States."
Iusacell currently boasts around 8.6 million subscribers despite offering coverage to 70 percent of the Mexican population that now hovers around 120 million (quick math reveals a potential customer base of 84 million). AT&T is hoping to capitalize on that margin and boost the number of subscribers in Latin American's second-largest economy.
Integrating the networks shouldn't be too difficult as Iusacell operates a 3G network that utilizes the same GSM/UMTS technology as AT&T. In other words, this deal should make it easier for AT&T and Iusacell customers to use their devices across the border.
"It won't matter which country you're in or which country you're calling -- it will all be one network, one customer experience," says Stephenson.
AT&T has been eyeing expanding outside of borders in recent years, as have many other U.S. telecom firms. According to the New York Times, AT&T originally had its sights set on Europe, more specifically Vodafone in Britain. Since then, however, the company has shown a noted interest in Latin American countries. One reason, AT&T says, is because Mexico's president has been particularly supportive of inviting more telecom investment.
"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. Those reforms together with the country's strong economic outlook, growing population and growing middle class make Mexico an attractive place to invest," said Stephenson.
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