AT&T Buys Mexico-Based Wireless Vendor Iusacell for $2.5B

The Iusacell purchase will help AT&T expand its coverage across a much wider swath of North America.

AT&T buys Mexican carrier

AT&T is expanding its wireless coverage of North America by acquiring Mexican wireless provider Iusacell for $2.5 billion, which will include the company's licenses, network, retail stores and some 8.6 million wireless subscribers.

The move was revealed by AT&T in a Nov. 7 announcement that touted the acquisition as "a natural geographic expansion of its wireless footprint into a country with a growing economy that is interdependent with the U.S. economy."

The Iusacell purchase will help AT&T create what it calls its first-ever North American mobile service area that will cover some 400 million consumers and business in the United States and in Mexico, the company said. AT&T plans to expand the network following the closing of the acquisition.

The deal was made with Grupo Salinas, which presently owns 50 percent of Iusacell, according to AT&T. As part of the agreement, Grupo Salinas will purchase the other 50 percent of Iusacell that it does not own today. Iusacell offers wireless service under both the Iusacell and Unefón brand names with a network that covers about 70 percent of Mexico's approximately 120 million people.

"Our acquisition of Iusacell is a direct result of the reforms put in place by President Peña Nieto to encourage more competition and more investment in Mexico," Randall Stephenson, AT&T's chairman and CEO, said in a statement. "Those reforms, together with the country's strong economic outlook, growing population and growing middle class make Mexico an attractive place to invest."

By acquiring Iusacell and bringing it together with AT&T's U.S. network, users will have a more seamless wireless experience, said Stephenson. "It won't matter which country you're in or which country you're calling—it will all be one network, one customer experience."

The acquisition will allow AT&T to provide the "financial resources, scale and expertise to accelerate the roll-out of world-class mobile Internet speeds and quality in Mexico, like we have in the United States," he added.

Iusacell's wireless infrastructure is a 3G wireless network based on the global GSM/UMTS technology that AT&T uses in the United States, according to AT&T. Iusacell owns between 20MHz and 25MHz of 800MHz spectrum, primarily in the southern half of the country, including Mexico City and Guadalajara, and an average of 39MHz of PCS spectrum nationwide.

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.

Also in October, AT&T Mobility was sued by two U.S. government agencies for allegedly throttling down service speeds for at least 3.5 million mobile phone customers despite contracts that allowed the customers to enjoy unlimited data use under their service plans.

In an unrelated case, AT&T Mobility was fined a record $105 million by the FCC and FTC earlier this month for illegally "cramming" customer cell phone bills with extra, unauthorized charges and for refusing to adequately remove the charges when users complained. That $105 million fine included $80 million for direct refunds to customers as well as $25 million in penalties to be paid to the FCC, the FTC and to attorneys general across the United States. It was the largest fine in the history of the FCC, according to the agency.