Analysts say Mexican carrier's assets still on table for AT&T

AT&T Inc.'s acquisition of assets in Mexico from a bankrupt wireless carrier is likely not as bad for billionaire Carlos Slim as investors initially thought, analysts say.

Shares of Slim's America Movil SAB, Mexico's largest mobile-phone operator, fell as much as 3.5 percent after AT&T announced its third deal in the country, the purchase of NII Holding Inc.'s Nextel Mexico business for $1.88 billion. The shares fell because Slim has yet to sell some of his wireless assets in Mexico after six months of trying, and AT&T was one of the potential buyers contacted for that sale, people familiar with the matter have said.

AT&T previously bought wireless carrier Iusacell for $1.8 billion and agreed to pay $48.5 billion for DirecTV, including its Latin American business. AT&T has now committed more than $50 billion to acquisitions that help its expansion south of the U.S. border for the first time in more than a decade.

That doesn't mean some of America Movil's assets are off the takeover menu, according to Walt Piecyk, an analyst at BTIG LLC. The deals show that AT&T is trying to build a sizable business in Mexico, and acquiring part of America Movil would accelerate that plan and help the operations make money, he said.

"Having Nextel and Iusacell gives them a national platform but with a little bit of scale," Piecyk said. "It would seem likely that AT&T would want to add to that by purchasing any assets that America Movil has to sell on the fixed or wireless end of things."

Representatives for Dallas-based AT&T and Mexico City-based America Movil declined to comment.

A telecommunications overhaul signed into law by Mexican President Enrique Pena Nieto last year is designed to increase competition in an industry that's been dominated by a handful of the country's richest people for decades.

America Movil announced a breakup of its assets in July because of the new rules, which force dominant phone and broadcast companies to reduce market share below 50 percent or face antitrust penalties designed to curb profits.

Slim's company has been adjusting its breakup plan to make its assets more attractive to potential suitors, including AT&T, people with knowledge of the matter said earlier this month. America Movil now plans to offer specific segments of customers to buyers, instead of splitting the assets into geographic regions, the people said.

After the Iusacell and DirecTV purchases, it would make sense for AT&T to take interest in landline assets, said Jesus Romo, an analyst at Telconomia, said in an interview from Missouri.

"The attractive thing about America Movil is not just in terms of towers, but also transport infrastructure, wiring and fiber," Romo said. From AT&T's perspective, "it would have to be an a la carte plan," he said.

With Nextel, AT&T will face the challenge of turning around a company that was slow to adapt to newer technologies, losing more than 400,000 subscribers in the first three quarters of 2014. Unlike Nextel, America Movil would be a cash-generating business for AT&T, Piecyk said.

The Nextel purchase gives AT&T the country's highest-paying customers, with an average monthly bill of $34 -- almost three times what competitor America Movil's subscribers pay for service.

Although Nextel comes with high-paying subscribers, it still leaves AT&T piecing together a Mexican phone company that's dwarfed by America Movil. The purchases of Iusacell and Nextel Mexico will give AT&T about 12 percent of the country's wireless subscribers, according to Piecyk. That still pales in comparison to America Movil's almost 70 percent share of the country's mobile-phone customers and 80 percent of landlines.

Business on 01/27/2015

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