AT&T Continues Expansion by Acquiring Mexico's Nextel Wireless Network

The $1.88 billion Nextel Mexico acquisition is AT&T's third recent deal in the region and includes spectrum licenses, retail stores and other assets.

AT&T, Nextel, wireless, Mexico

AT&T is buying Nextel Mexico's assets for $1.88 billion in a deal that will bring AT&T another 3 million customers.

The Nextel Mexico acquisition, which was announced by AT&T on Jan. 26, comes through a deal with NII Holding, which owns Nextel Mexico, according to AT&T. Nextel Mexico had filed for bankruptcy in September 2014, so the transaction is subject to a bankruptcy auction and approvals by the U.S. Bankruptcy Court for the Southern District of New York, stated AT&T.

The deal, which does not include Nextel Mexico's outstanding debt, includes all of NII's wireless properties in Mexico, including spectrum licenses, network assets, retail stores and approximately 3 million subscribers, according to AT&T. Some 76 million people live in the area covered by Nextel Mexico's network.

"The acquisition of Nextel Mexico will support AT&T's plans to bring greater competition and faster mobile Internet speeds to the Mexican wireless market," the company said in a statement. "AT&T plans to create the first-ever North American Mobile Service area covering over 400 million consumers and businesses in Mexico and the United States, and Nextel Mexico's subscribers will be included."

AT&T already has a pending takeover in Mexico of DirecTV's operations there, according to a Jan. 26 report by Bloomberg. In November 2014, AT&T announced that it was acquiring Mexican wireless provider Iusacell for $2.5 billion, which included the company's licenses, network, retail stores and some 8.6 million wireless subscribers, according to an earlier eWEEK report.

That move was touted by AT&T as a natural geographic expansion of its wireless footprint into a country with a growing economy that is interdependent with the U.S. economy. That deal was made with Grupo Salinas, which at the time owned about 50 percent of Iusacell, according to AT&T. Iusacell offers wireless services under both the Iusacell and Unefón brand names with a network that covers about 70 percent of Mexico's approximately 120 million people.

The Nextel Mexico acquisition will build on those earlier deals, according to AT&T. "Combining Nextel Mexico with Iusacell will allow AT&T to more quickly improve and expand its mobile Internet service to the benefit of millions of Mexicans, particularly those who live outside major metropolitan areas, than it could otherwise do without the transaction," the company said in its statement.

The latest deal is also subject to regulatory approval by Mexico's telecom regulator IFT (Instituto Federal de Telecomunicaciones), said AT&T. The transaction is expected to close in mid- 2015.

In late October, AT&T reported that it gained 2 million wireless customers in the United States in the third quarter of 2014, helping drive up the carrier's wireless sales 5 percent and overall revenues 2.5 percent from the same period last year.

AT&T generated $33 billion in revenue in the third quarter, with $18.3 billion of that coming from the carrier's wireless business, which saw revenues increase 4.9 percent. However, net income for the period came in at $3 billion, down from $3.8 billion in the third quarter of 2013.

NII said it will use the proceeds of the Nextel Mexico sale to help emerge from Chapter 11 and fund its Brazilian unit, according to Bloomberg.