AT&T to Buy Nextel Mexico for $1.9B

AT&T is expanding its reach south of the border once again, this time spending $1.875 billion to acquire Nextel Mexico from NII Holdings. It will merge the operator's customers with its recently acquired Iusacell customer base, creating what it calls the first ever North American Mobile Service area.

AT&T Inc. (NYSE: T) announced the acquisition early Monday, noting that it would pay Nextel Mexico owner NII Holdings Inc. (Nasdaq: NIHD) $1.875 billion, less the outstanding net debt of the business at closing for all the companies that operate under the name Nextel Mexico and all of NII's wireless properties in Mexico, including spectrum licenses, network assets, retail stores and around 3 million subscribers.

The acquisition is expected to close in mid-2015 subject to regulatory review in Mexico and bankruptcy auction and approvals for NII in New York as the company filed for bankruptcy in the US in September. It comes just one week after AT&T closed its acquisition of fellow Mexican wireless operator Iusacell for $2.5 billion. (See AT&T Names Iusacell CEO, Closes Acquisition and AT&T to Buy Iusacell, Plans Lower Capex For 2015.)

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AT&T has its sights set on becoming a cross-border operator, and spending over $4 billion on Iusacell and Nextel Mexico is clearly a big strategic step in that direction. The carrier says Nextel Mexico's iDEN network covers around 76 million people, which it plans to combine with Iusacell's 8.6 million 3G HSPA+ customers, reaching 70% of the Mexican population -- albeit with different network technologies.

AT&T pledges to extend service outside of major metropolitan areas as part of its goal to create "the first-ever North American Mobile Service area covering over 400 million consumers and businesses in Mexico and the US."

Its customers in the US are already feeling the benefits of this reach as AT&T has launched unlimited calling to anywhere in Mexico. But its vendors might be feeling less positive effects of the acquisitions as well, as AT&T has had to lower its capital expenditure plans for 2015, partly as a result of its outlay of cash in Mexico. (See AT&T Dials Up Unlimited Calling to Mexico and AT&T's Mexican Capex Dance.)

AT&T is also waiting approval for its $48.5 billion acquisition of DirecTV Group Inc. (NYSE: DTV), which has operations in Mexico. (See AT&T: Merger Review Halt Won't Hurt Us and AT&T: We'll Bundle Fixed Wireless & DirecTV.)

— Sarah Thomas, Editorial Operations Director, Light Reading