So much of the 'North American' telecommunications market still stops at the Rio Grande that it's a significant story when someone crosses it. Over the weekend AT&T did just that, however, announcing a deal to purchase Mexico's Iusacell. The move comes just months after AT&T exited its stake in America Movil and will put them in direct competition with Carlos Slim's telecommunications empire.
AT&T is spending $2.5B to buy Iusacell's wireless properties, which serve about 8.6M subscribers and reach about 70% of the total Mexican population (about 120M). Iusacell is the country's third largest provider, behind America Movil and Telefonica. It's a 3G footprint for now, although AT&T could decide to upgrade that to LTE sooner than Iusacell might have. When complete, AT&T's North American network reach will surpass 400M in population.
The price tag is less than half of what they got from the sale of the America Movil stake. It stands to reason that AT&T might not stop with Iusacell, but could make further inorganic moves to beef up the assets. In September they were said to be in the running for the assets that America Movil is divesting to make the Mexican government happy. We don't know what those assets will be, precisely, but the extra scale and infrastructure those would bring could easily be part of the overall plan.
Of course, in the US AT&T is still working on the DIRECTV acquisition, so it does have its hands full on the M&A front. Yet with their Project VIP organic expansion starting to ramp back down and capex for 2015 expected to drop back to $18B, one wonders what the next project will be.
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