AT&T goes pan American, closing its $2.5B Iusacell deal

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Credit: AT&T

AT&T is now officially the first North American mobile carrier to run networks on both sides of Rio Grande. On Friday, Ma Bell announced it has finalized its $2.5 billion acquisition of Mexico’s Iusacell from Gurpo Salinas.

The deal doesn’t bring that many new subscribers to its network – Iusacell’s 9.2 million subscribers puts it in a distant third place to Mexican wireless giant América Móvil — but it gains access to a GSM and CDMA network covering 120 million people. AT&T is promising to create a unified network covering 400 million people in North America, though I doubt that will mean the in-network coverage on a standard AT&T plan will suddenly extend to Mexico City and Oaxaca.

Chances are AT&T will start marketing specific plans for frequent cross-border travelers in both countries as well as sell calling features that make it cheap or free to call Mexican landlines and mobile numbers from the U.S. and vice versa. América Móvil does much the same thing through its U.S. mobile virtual network operator TracFone. For instance, one of TracFone’s brands Telcel América is named after Móvil’s primary brand Telcel in Mexico, an it offers a $60 plan that includes 1,000 calling minutes to mobile numbers in Mexico and unrestricted calling to landlines in Mexico along with unlimited talk and text inside of U.S. borders.

AT&T appointed a 19-year Ma Bell vet Thaddeus Arroyo as CEO of Iusacell, and he will be assisted former CEO Adrian Stickel in the transition. I suspect they’ll have a big integration task ahead of them. It takes a lot more than just duct tape and superglue to fully combine two national networks, though the fact those networks are in completely different geographies helps. Iusacell is also in the process of transition from CDMA technology to GSM, which will make roaming between the two countries a lot easier.

AT&T has also committed to bring LTE services to Mexico, which Ma Bell helps will be key to growing Iusacell’s customer base. Mexico has a rapidly growing middle class, but its smartphone penetration is roughly half that of the U.S. LTE and smartphones go hand and hand, so 4G represents a big opportunity for the combined carrier, AT&T said in a statement.

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