AT&T has bought out another Mexican telecom firm, Nextel Mexico, quickly consolidating its position in the country where billionaire businessman Carlos Slim’s telecom firms dominate the market.
The U.S. telecom giant paid US$1.8 billion for the wireless assets, which include spectrum licenses and networking infrastructure. Nextel Mexico reportedly serves more than seven million customers.
This is AT&T’s third major expansion in Latin America after it purchased Grupo Iusacell for US$2.5 billion and also acquired DirecTV last year.
These acquisitions remove the need for AT&T to build a network from the ground up and ease the task of expanding telecom service to all areas of the country. Nextel Mexico’s network covers an area that is home to about 76 million people, while Iusacell reaches 70% of Mexico.
AT&T will now combine Iusacell with Nextel’s network, creating the first-ever North American Mobile Service area, covering over 400 million consumers and businesses in both Mexico and the United States.
The network will benefit 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.
While its continued expansion poses a threat to America Movil’s dominance, AT&T can potentially improve the quality of service and bring down service prices, injecting competition into the market.
Expanding operations to emerging economies is crucial for AT&T, as the U.S. market has become all but saturated. Its latest acquisition is subject to scrutiny from the U.S. Bankruptcy Court, because Nextel Mexico was a local unit of NII Holdings, which had applied for bankruptcy in an attempt to restructure its operation.