The long-awaited merger between Axtel and Alestra has moved a step closer to reality, now that the players have completed due diligence. The combined group, which will control 8% of the fixed-line market, will compete against dominant player Telmex, as well as Televisa, Telefónica and Megacable.
Mexican fixed-line challengers Axtel (BMV:AXTEL) and Alestra have finalised their agreement for an all-stock merger, which must now be approved by the country’s stock market authority.
Axtel’s shareholders are expected to approve the transaction at an extraordinary general meeting scheduled for 15 January 2016. The groups had signed an MoU on 1 October.
Alestra’s conglomerate parent Alfa (BMV:ALFA) will own 51% of the combined group, with Axtel to issue it new shares.
Axtel was advised by Citigroup, and Alfa used its in-house team.
The two companies together account for less than 8% of fixed-line traffic, in competition with Telmex[b], which controls 62.5% of the 21 million fixed lines. Other fixed-line providers include leading media group Televisa (19%), Telefónica (6.8%) and Megacable (3.6%), according to telecoms regulator IFT.
Axtel/Alestra will have 37,500km of backbone, metropolitan and FTTH fibre optics network, and 6,000 square metres of data centre space.
They will generate US$892m in pro-forma annual revenues, with Ps11bn (US$654m) from enterprise and another Ps4bn (US$238m) from consumer services. Alestra’s focus is the B2B market, while Axtel is consumer oriented.
Alestra CEO Rolando Zubirán Shetler will head the company, with Axtel CFO Felipe Canales Tijerina as financial chief.
Alfa CEO Alvaro Fernández Garza will become co-chairman alongside Axtel’s current CEO and chairman Milmo Santos.
The IFT has been implementing measures to curb the dominance of Telmex, most recently demanding that it amend local loop unbundling terms.
