AT&T Inc. (T) Mexico Acquisitions To Create Massive North American Mobile Service
AT&T Inc. (NYSE:T) is not leaving anything to chance to expand in potentially lucrative markets, especially in the Latin America. The company has announced another acquisition in Mexico, whereby it targets Nextel Mexico, which is currently a bankruptcy case. AT&T targets to have a massive wireless subscriber base of 400 million in North America.
AT&T Inc. (NYSE:T) plans to purchase Nextel for about $1.9 billion. The move will add three million wireless subscribers to its network and expose the company to about 76 million people. In the deal, AT&T targets Nextel Mexico’s retail outlets, airwave licenses, and wireless networks. The acquisition of Nextel is expected to expose AT&T to millions of potential customers outside the main metropolitan areas of Mexico, which it would not have reached quickly without Nextel’s network. AT&T will need the approval of the Mexican regulators and the U.S. Bankruptcy Court to close the acquisition. The deal with Nextel Mexico could close in mid-2015.
In a separate deal in Mexico, AT&T recently closed the acquisition of Iusacell, a wireless provider, for $2.5 billion. If AT&T combines Nextel and Iusacell, its wireless market share in Mexico would be 12%, but that could increase over time as the company also targets some assets in the country.
Mexican wireless giant, America Movil SAB de CV (ADR) (NYSE:AMX), is under pressure by the regulators to reduce its control in the sector. As such, the company is expected to offload some of its wireless assets and AT&T has been cited as one of the potential buyers.
Massive spending and liquidity concern
Although AT&T Inc. (NYSE:T) is pursuing massive growth in North America, some have raised issues about the company’s potential liquidly challenge amid acquisitions. The company seems to be spending a lot to attain success in new markets. According to some analysts, AT&T might squeeze its liquidity position if it continues its buying frenzy this year.
The company intends to spend $18 billion in capital projects this year. It also has a plan to pay out an annual dividend of about $10 billion and wants to buy DIRECTV (NASDAQ:DTV) for $49 billion. AT&T is also expected to participate in the $45 billion spectrum auction by the FCC. These projects could squeeze the company’s cash position.
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