AT&T Aims for Leading Market Spot in Mexico, Local CEO Says

By Anthony Harrup 

MEXICO CITY--U.S. telecommunications giant AT&T Inc. plans substantial investments in Mexico to expand and upgrade its mobile network as it seeks to increase market share and become a leader in the industry, AT&T Mexico's Chief Executive Thaddeus Arroyo said Wednesday.

AT&T bought mobile-service provider Iusacell in the first quarter for $2.5 billion, including debt, and in late April paid $1.88 billion for NII Holdings Inc. unit Nextel Mexico.

"Right now we're totally focused on integrating the assets we just bought," Mr. Arroyo said in a meeting with reporters. "Our long-term goal is to be a leader in the market."

The Dallas-based company's decision to enter Mexico follows changes in local telecommunications laws that imposed stiff regulations on dominant carrier América Móvil, and has been welcomed by the Mexican government as an example of positive results from the overhaul.

Mexico's Economy Ministry said Wednesday that the Iusacell purchase contributed $2.04 billion to the $7.57 billion Mexico received in first-quarter foreign direct investment. AT&T had subtracted from foreign direct investment in Mexico last year when it sold its 8.3% stake in América Móvil.

Mr. Arroyo didn't specify how much AT&T plans to invest in coming years as it seeks to step up competition for América Móvil and Spain's Telefónica, but said much of the investment will come in the next two years to accelerate growth.

The U.S. company reported six million subscribers at Iusacell at the end of March, after adjusting down the number from 9.2 million when it acquired the Mexican company.

"This is quite normal. When we buy a company, we apply our own rules on how we count customers. We'll do the same thing with Nextel," Mr. Arroyo said. Nextel Mexico had around three million subscribers when AT&T agreed to buy it in January.

Telefónica reported strong subscriber growth in the first quarter, increasing its number of mobile customers in Mexico by 17% on the year to 22.5 million. The company cited intense marketing efforts and new regulations, such as the elimination of charges to connect calls to the América Móvil network, in reporting a 70% increase in operating income. América Móvil unit Telcel had 72.1 million wireless subscribers at the end of March.

Write to Anthony Harrup at [e-mail]

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