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AT&T Expands into Mexico with Iusacell Acquisition
AT&T (News - Alert) has announced that it will acquire the Mexican wireless company Iusacell for $2.5 billion, which will effectively turn the company into a major player in that country on top of being the number two wireless carrier in the U.S. The acquisition is expected to be completed by March 2015, according to TelecomLead, and will include Iusacell (News - Alert)'s network assets, licenses, retail stores and its approximately 8.6 million subscribers.
“Our acquisition of Iusacell is a direct result of the reforms put in place by President Pena Nieto to encourage more competition and more investment in Mexico,” said AT&T Chairman and CEO Randall Stephenson in the official corporate announcement. “Those reforms together with the country’s strong economic outlook, growing population and growing middle class make Mexico an attractive place to invest.”
Iusacell's network covers about 70 percent of Mexico's approximately 120 million residents, despite its relatively low subscribership. AT&T, seeing an opportunity for significant expansion, hopes to add millions more consumers and businesses once the acquisition is complete. Since smartphone penetration in Mexico is much lower than in the U.S. – only about 50 percent, but growing – there is undoubtedly a large market for wireless products that will need to be filled.
“Iusacell gives us a unique opportunity to create the first-ever North American Mobile Service area covering over 400 million consumers and businesses in Mexico and the United States,” Randall continued. “It won’t matter which country you’re in or which country you’re calling – it will all be one network, one customer experience.”
Currently Iusacell is split into two owners: Grupo Salinas and Grupo Televisa. Grupo Salinas is currently in the process of buying the other half from Grupo Televisa before selling Iusacell as a whole.
AT&T has revealed other plans in the works to expand its presence in Mexico even further, currently engaging in talks with America Movil to acquire approximately $17.5 billion worth of its wireless and landline assets. America Movil is looking to reduce its dominant market share – almost 70 percent – for regulatory compliance purposes. In addition, AT&T is awaiting final approval for the purchase of DirecTV (News - Alert) for $48.5 billion.