AT&T Faces Off With Former Ally Slim in 2nd Mexico Deal

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Carlos.SlimAT&T Inc. (T:US) is accelerating a push south of the border with its second acquisition in Mexico this year, solidifying a face-off with former longtime ally Carlos Slim.

 
The U.S. phone company is paying $2.5 billion for Grupo Iusacell SA, a struggling third-place mobile-phone operator in Mexico that competes with Slim’s America Movil SAB. (AMXL) AT&T is already buying DirecTV, a move that aligns it with one of Slim’s fiercest Mexican rivals, Grupo Televisa SAB. To help win approval for DirecTV, AT&T had to sever ties with America Movil.
AT&T is taking advantage of new Mexican telecommunications laws that are promoting competition in the wireless market. Those same rules are why America Movil is looking to sell parts of its wireless and landline assets to reduce its dominant market share. AT&T was among potential buyers contacted about America Movil’s assets, a deal that would further pit the partners of 24 years against each other.

“If you put these two together you get about a 30 percent market share and create a strong No. 2 player and not a weak No. 3,” said Entner, who is based in Dedham, Massachusetts.
AT&T is gaining 8.6 million subscribers by buying closely held Iusacell from billionaire Ricardo Salinas. The deal price includes $700 million of net debt, making the equity value $1.8 billion. While AT&T said it plans to expand Iusacell’s footprint beyond the 70 percent of Mexico’s population that it currently reaches, Iusacell currently only has about 8 percent market share in Mexico.

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