Alfa SAB agreed to purchase telephone companyAxtel SAB, folding it into the Mexican conglomerate’s Alestra telecommunications business as competition increases under new government regulations.
Axtel, whose market value was about 10 billion pesos ($595 million) at Thursday’s close, is expected to issue new stock to be held by Alfa for about 51 percent of a new combined entity, the companies
said. Financial terms weren’t released, and Axtel will continue to be publicly traded.
The merger enables the companies to combine different portions of the telecommunications market at a time when new laws are bolstering the advent of new rivals. While Axtel has focused on residential customers, offering fiber-optic lines with video and high-speed Internet in large cities such as Monterrey and Mexico City, Alestra has migrated to value-added data services.
Mexico overhauled its telecommunications laws last year to lower costs for smaller service providers such as eliminating fees that Axtel paid to make calls on
America Movil SAB’s network. But competition with bigger rivals such asGrupo Televisa SAB has increased, prompting Axtel to reduce prices to keep subscribers.
Axtel shares have gained 62 percent since July 21 as investors bet it was a takeover target. That speculation was fueled by Alestra executives, who had
said on a conference call that growth was a priority and that they would consider mergers and acquisitions.