AT&T has agreed to acquire Nextel Mexico for $1.88 billion, less than two weeks after completing the $2.5 billion purchase of Iusacell.
Nextel provides mobile services to approximately 3 million customers and its network covers around 76 million people. AT&T said on Monday that it will take ownership of Nextel’s wireless properties, including spectrum licences, network assets, retail stores and subscribers. It aims to close the transaction in mid-2015.
"The transaction with AT&T ensures that customers of Nextel Mexico will continue to be served by a high quality telecommunications company committed to providing innovative products, services and solutions to the market," said a statement from Steve Shindler, CEO of Nextel Mexico’s parent company NII Holdings, which is currently under bankruptcy protection.
Nextel Mexico will become part of AT&T’s North American service area encompassing the U.S. and Mexico. It will treat the customers and businesses it covers as though they are on a single network and provide a consistent customer experience.
This strategy kicked off in November when AT&T agreed to acquire Iusacell for $2.5 billion. The deal closed on 16 January, and AT&T quickly followed up with an amended international calling package that includes unlimited calls to Mexico. Days after announcing the Iusacell deal, AT&T chief executive Randall Stephenson revealed he was also interested in Nextel Mexico.
"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 metrop olitan areas, than it could otherwise do without the transaction," said AT&T, in a statement on Monday.
The deal is subject to approval by the U.S. Bankruptcy Court for the Southern District of New York, which is overseeing the restructuring of Nextel Mexico’s parent, NII Holdings.
The U.S.-based telco, which operates in Argentina, Brazil, Chile and Mexico, filed for bankruptcy protection in September. It cited pressure to cut costs and relax credit controls in a bid to attract customers, the billions of dollars it spent on building 3G networks, and macroeconomic uncertainty as the chief causes of financial strain.
In November, NII Holdings struck a restructuring deal with creditors that will see it swap $4.35 billion of company debt for equity in the reorganised company. It will also receive $500 million in capital in the form of a $250 million rights offering to creditors and $250 million of exit financing in the form of debt.
"We believe that the sale of Nextel Mexico represents an opportunity to reduce our operational risk, deliver value to our stakeholders and provide the liquidity that will position us to emerge from Chapter 11 reorganisation with a healthy balance sheet and fund our business plan in Brazil," said Shindler.
"The sale also allows our Mexico team to continue to grow and thrive, capitalising on the opportunities in the Mexican telecom market with the support of one of the largest telecom companies in the world," he said.
