MEXICO CITY?Mexican telecommunications companies Axtel SAB and Alestra have agreed to merge their operations, seeking greater size to compete in an increasingly competitive local market.
Axtel said Thursday that it signed a memorandum of understanding with conglomerate Alfa SAB and Alfa's telecom unit Alestra to join the two telecommunications companies.
"The new entity will have a more robust network and commercial operation," Axtel said in a news release, adding that the planned merger should create economies of scale and financial synergies. The combined base of corporate and consumer clients generate pro forma annual revenue around 15 billion pesos ($890 million).
Axtel will continue to exist as a listed holding company, and plans to issue shares to Alfa to pay for Alestra for the equivalent of 51% of the merged concern.
The companies said the transaction is expected to close at the end of this year or in early 2016.
Axtel offers fixed-line services, including telephony, broadband Internet and TV. It had 605,000 customers, who had 1.5 million subscriptions to its different services, at the end of 2014. Alestra's operations focus on corporate customers, and include data centers, networks, cloud and consultancy services.
The merger comes amid changes in the competitive landscape in Mexican telecommunications. U.S. giant AT&T Inc. bought two mobile operators this year and plans significant investments to compete with Amé rica Mó vil SAB and Spain's Telefó nica SA. On the fixed-line front, Amé rica Mó vil unit Telmex faces increased competition from cable TV companies offering telephony and broadband.
Write to Anthony Harrup at
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