AT&T said it would buy bankrupt NII Holdings’ wireless business in Mexico for $1.875 billion, less outstanding net debt.
AT&T’s shares were down almost one percent at $33.11 in afternoon trading on the New York Stock Exchange.
NII Holdings, the parent of Nextel operators in Latin America, filed for bankruptcy protection in the United States in September after struggling with $5.8 billion in debt and fierce competition in Brazil and Mexico.
AT&T plans to combine Nextel Mexico with Iusacell, which the company acquired in November for $1.7 billion.
While Nextel Mexico has about three million subscribers, Iusacell, Mexico’s third-largest wireless operator, has over eight million subscribers.
“While there are logical roaming savings [AT&T] will see by having a presence in Mexico, we believe the bigger driver is the longer runway it sees for Mexico to follow the U.S. in terms of smartphone penetration and mobile data growth,” Wells Fargo Securities analyst Jennifer Fritzsche wrote in a note.
Mexico’s telecom market is dominated by billionaire Carlos Slim’s America Movil, which has a 70 percent share of the market, followed by Telefonica, with nearly 20 percent.
Some of America Movil’s assets are up for sale, and AT&T had been tipped as a buyer, but the U.S. telecom company had downplayed any interest.
The Nextel Mexico transaction is subject to a bankruptcy auction and approvals by the U.S. Bankruptcy Court for the Southern District of New York, AT&T said in a statement.
Jones Day is the legal adviser to NII Holdings for the deal.
(Reporting by Supantha Mukherjee and Kshitiz Goliya in Bengaluru; Editing by Sriraj Kalluvila)
This article originally appeared on Recode.net.