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AT&T enters Mexican mobile market with Iusacell acquisition

AT&T is acquiring Mexican operator Iusacell for $2.5 billion.

The deal is like to cause a stir in Mexico’s mobile market, which has been dominated by America Movil’s Telcel for years.

Iusacell’s network currently covers around 70% of Mexico’s population of 120 million, putting it in third place with 8.5 million connections. America Movil leads the market with 70 million while Telefonica takes second place with 21 million.

In a statement, AT&T said that it “plans to expand Iusacell’s network to cover millions of additional customers and businesses in Mexico”.

The acquisition is in part unsurprising as AT&T’s interest in Mexico was already known. However, there had been speculation over whether the US-based operator would buy assets offered to it by America Movil as part of its efforts to scale down its market dominance.

While the Iusacell acquisition makes this unlikely, it is still an option if AT&T wishes to push further with in-market consolidation. However, the current regulator IFT is focused on encouraging greater competition so it could object to such a move.

“Iusacell gives us a unique opportunity to create the first-ever North American Mobile Service area covering over 400 million consumers and businesses in Mexico and the United States. It won’t matter which country you’re in or which country you’re calling – it will all be one network, one customer experience,” said Randall Stephenson, chairman and CEO of AT&T.

AT&T also stated that Mexico is “still in the early stages of mobile internet capabilities and adoption, but customer demand for it is growing rapidly”, and that “recent changes to government policies in Mexico have created a friendly climate for foreign investment”.

The sale will take place once Iusacell’s current owner, Grupo Salinas, has closed the acquisition of the 50% stake in the operator that it does not own. AT&T will then acquire the entirety of Iusacell’s operation, including assets, licences, stores and subscribers.

Iusacell is headquartered in Mexico City and operates a 3G network using the same WCDMA technology deployed by AT&T.

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