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AT&T to acquire Mexico wireless provider Iusacell

Staff writer |
AT&T has entered into an agreement with Grupo Salinas to acquire Mexican wireless company Iusacell for $2.5 billion, inclusive of Iusacell debt.

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Under the terms of the agreement, AT&T will acquire all of Iusacell’s wireless properties, including licenses, network assets, retail stores and approximately 8.6 million subscribers. The acquisition will occur after Grupo Salinas, the current owner of 50 percent of Iusacell, closes its announced purchase of the other 50 percent of Iusacell that Grupo Salinas does not own today.

Iusacell offers wireless service under both the Iusacell and Unefón brand names with a network that today covers about 70 percent of Mexico’s approximately 120 million people. AT&T plans to expand Iusacell’s network to cover millions of additional consumers and businesses in Mexico.

Mexico has the second largest economy and one of the highest per capita GDPs in Latin America. The country today enjoys a strong credit rating, relatively low inflation and low unemployment. And Mexico and the United States are connected geographically, economically and culturally.

Iusacell operates a 3G wireless network based on the global GSM/UMTS technology that AT&T uses in the United States. Iusacell owns between 20 and 25 MHz of 800 MHz spectrum, primarily in the southern half of the country, including Mexico City and Guadalajara, and an average of 39MHz of PCS spectrum nationwide.

Iusacell’s Total Play business, including the network assets to support pay TV and wireline broadband services will be spun out to Grupo Salinas’ existing shareholders prior to AT&T closing its acquisition of Iusacell.

AT&T said Iusacell represents a natural geographic expansion of its wireless footprint into a country with a growing economy that is interdependent with the U.S. economy.

Recent changes to government policies in Mexico have created a friendly climate for foreign investment. This transaction gives AT&T the assets necessary to create a first-ever North American Mobile Service area for U.S. customers calling or visiting Mexico, and Mexican customers calling or visiting the United States –whether they live near the border or thousands of miles away.

The United States’ large and growing Hispanic population has close ties to Mexico and many current AT&T business customers have operations in Mexico. Mexico is the United States’ third largest trading partner.

The percent of Mexico’s population that has wireless service lags Latin America overall. Smartphone penetration in Mexico is about half that of the United States. AT&T expects that as the price to acquire a smartphone continues to decline and the availability of higher-speed mobile networks in Mexico increases, there will be higher smartphone adoption and increased mobile Internet usage.

This coupled with Mexico’s growing economy, growing middle class, relatively young population, rising urbanization rates and higher disposable incomes are expected to drive growing demand for high-quality, high-speed mobile service in the years ahead.

Iusacell will continue to be headquartered in Mexico City following the transaction closing.


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