AT&T expands into Mexico with $2.5 billion acquisition of Iusacell

AT&T has agreed a deal to expand into Mexico with the acquisition of local carrier Iusacell. The $2.5 billion move will create the first ever “North American mobile service,” AT&T says, and it will serve more than 400 million people across the U.S. and Mexico. As part of the deal, AT&T will take on Iusacell’s 8.6 million subscribers as well as its wireless properties, which cover around 70% of Mexico’s 120 million citizens. Iusacell uses the same GSM-based infrastructure that AT&T does in the U.S., though it doesn’t yet offer 4G LTE connectivity.

AT&T agreed on Friday to buy Iusacell, one of Mexico’s biggest cellphone service providers, for $2.5 billion including debt, as it seeks to expand its international presence by moving southward. The deal comes five months after AT&T sold its stake in América Móvil, Mexico’s biggest phone company, after agreeing to buy DirecTV for $48.5 billion. The American company later acknowledged that it would begin competing directly against its onetime partner. Now it will do so by buying Iusacell, which claims about 8.6 million customers across 70 percent of Mexico. Work on the transaction began in earnest shortly after the sale of the América Móvil stake. Grupo Salinas, which is set to acquire the 50 percent of Iusacell that it doesn’t already own, realized that upgrading the phone carrier’s network to faster wireless data speeds would require an enormous amount of investments.