The Mexican telecom giant has struck a deal to take over its direct competitor Nextel Brazil with a combined sum of $905 million. America Movil controls the telecom operator Claro in Brazil.
Nextel Brazil is under NII (formerly Nextel International) which owns 70 percent of the company. The remaining is held by Al Brazil Holdings. This acquisition is claimed “to dissolve and wind up NII” after its approval, as said by NII.
This move is said to be a strategy to strengthen America Movil against market rivals like Telefonica, Telecom Italia and Oi. The Mexican telecom operate said the merger with Nextel Brazil would “consolidate its position as one of the leading telecommunication service providers in Brazil”. The merger would particularly benefit the America Movil in the cities of Sao Paulo and Rio de Janeiro, which are the main markets in Brazil.
The deal is, however, still awaiting regulatory approval. If it goes through, about 3.3 million connections would be added to America Movil’s market in Brazil. It is currently the second-largest telecom operator in the country with more than 56 million connections. Telefonica’s Vivo brand leads the market with 73 million connections.
For NII, on the other hand, the acquisition seems to the last chapter. While it had mobile carrier operations in a wide range of developing markets, it has struggled through bankruptcy twice. Back in 2015, Nextel Mexico operations were sold to AT&T. The next year, Nextel exited Argentina after being sold to Grupo Clarin.
Nonetheless, NII’s Management and Board of Directors believe the move to be “in the best interest of NII’s stockholders”.