Bankrupt US telecoms group NII Holdings has agreed to sell its Mexican subsidiary, Nextel Mexico, to AT&T for US$1.875bn excluding debt.
The deal, which is subject to regulatory approval and a bidding process to be supervised by a US bankruptcy court,…
Bankrupt US telecoms group NII Holdings has agreed to sell its Mexican subsidiary, Nextel Mexico, to AT&T for US$1.875bn excluding debt.
The deal, which is subject to regulatory approval and a bidding process to be supervised by a US bankruptcy court, is due to close by mid-2015, the companies said in separate statements.
As part of the agreement, AT&T will acquire NII’s wireless properties in Mexico, including spectrum licences, network assets, retail stores and approximately three million subscribers.
Commenting on the sale, NII Holdings CEO Steve Shindler said: “We believe that the sale of Nextel Mexico represents an opportunity to reduce our operational risk, deliver value to our stakeholders and provide the liquidity that will position us to emerge from Chapter 11 reorganisation with a healthy balance sheet and fund our business plan in Brazil.”
Virginia-based NII Holdings filed for bankruptcy protection in September last year, after failing to meet its debt obligations.
Last November, it announced that it had reached a debt-for-equity swap agreement with its creditors, which include Aurelius Capital Management, Capital Research and Management and American Tower.
In the statement, NII said it expects to engage with its stakeholders in an effort to gain support for modifications to the restructuring plan that will allow it and its subsidiaries to emerge from bankruptcy protection.
The company’s operations in Mexico, Brazil and Argentina are not included in the pending bankruptcy proceedings and continue to operate as usual.
In August, NII sold its Chilean operations to Fucata, a joint venture between Argentine media group Grupo Veintitres, British investment firm ISM Capital and US private equity firm Optimum Advisors. Fucata was also reportedly in talks to buy Nextel Argentina.
AT&T plans to merge number four carrier Nextel with the country’s third-largest player, Iusacell, which it recently acquired in a US$2.5bn deal.
The Texas-based operator, which last week entered into a US$9.155bn syndicated credit agreement, first expressed interest in NII’s Mexican operations last November, when its CEO Randall Stephenson reportedly described the assets as “attractive”.
AT&T’s second Mexican acquisition in a few months comes hot on the heels of regulatory changes introduced by President Enrique Pena Nieto last year.
Further to the new telecoms bill, which is aimed at attracting foreign investments and boosting competition, Mexican incumbent America Movil has been required to sell some of its assets to reduce its market share to below 50%.
In the last few months, AT&T has been rumoured to be among the potential bidders for the assets, along with Softbank, Bell Canada, China Mobile and Telefonica. However, AT&T said it did need them to grow in the Mexican market.
