Bell Atlantic, Grupo IUSA Close Deal To Give Bell Atlantic Management Control of Grupo Iusacell
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Bell Atlantic, Grupo IUSA Close Deal To Give Bell Atlantic Management
Control of Grupo Iusacell
New President and CEO Named
February 19, 1997
Philadelphia & Mexico City -- Grupo Iusa and Bell
announced today the close of their deal to transfer management control
of Grupo Iusacell to Bell Atlantic. Grupo Iusacell's new control
structure, which was agreed to in principle by Bell Atlantic and Grupo
Iusa on November 26, 1996, received final Mexican government
authorization on February 12.
The new control structure and the conversions of debt into equity do
not change Grupo Iusacell's relative ownership by Bell Atlantic and
Grupo Iusa's owner, the Peralta Family. The Peralta Family will
continue to own 48 percent, Bell Atlantic will maintain 42 percent,
with the remaining 10 percent publicly traded.
As part of the new structure, Bell Atlantic Vice Chairman Lawrence T.
Babbio, Jr., is appointed vice chairman of Grupo Iusacell's Board,
Bell Atlantic controls a majority of Grupo Iusacell's board seats.
Bell Atlantic's commitment to provide up to $150 million in financing
will help Grupo Iusacell enhance existing operations and seek out new
opportunities in Mexico's rejuvenated economy.
In addition, Grupo Iusa and Bell Atlantic announced they have
converted approximately U.S.$70 million in Grupo Iusacell indebtedness
into approximately one million shares of Grupo Iusacell voting stock.
"Bell Atlantic's commitment to the Mexican market will not only help
Mexico grow, it also will allow Grupo Iusacell to tap the resources to
create long-term, sustainable competitive advantages," said Carlos
Peralta, president of Grupo Iusa. "We, as the largest shareholders
Grupo Iusacell, will actively support Bell Atlantic's new management
New President/CEO Appointed
As part of the change in management control, Bell Atlantic named Tom
Bartlett as the head of Grupo Iusacell's senior management
implementation team, as part of the implementation process. Bartlett
will take on the role of Iusacell's new president and chief executive
officer and will continue in his current responsibilities as president
and chief executive officer of Bell Atlantic International Wireless.
The implementation team is responsible for adapting the successful
Bell Atlantic business model to the Mexican market, and for putting in
place the vision, structure, and strategies that will help Iusacell
compete even more successfully.
"Tom has proven himself time and again as an international manager
can focus on drawing out maximum value for shareholders," said
"With his past successes in managing properties in Central and
Europe, and in North America, we are confident he and his team will
re-invigorate the company and help it rebound from lackluster results
The company noted that while this team will help implement necessary
changes, it will not change the essence or identity of Grupo Iusacell
as a Mexican company, run by Mexican nationals, and serving Mexican
The company said its focus going forward will be on the Mexican
market, leveraging Grupo Iusacell's local market knowledge and Bell
Atlantic's international success to further enhance Grupo Iusacell's
marketing, distribution, network operations, and customer service.
The company plans to integrate its lines of business, making it easier
for customers to buy and use its services, combining services into
unique products that create value for customers, and developing
efficiencies within the business.
"Our plan is simple: to generate long-term growth," said
"Our first order of business is to quickly put in place a business
model that will grow our cellular and long distance holdings and
enable us to package together all our telecommunications services to
meet customer needs."
Grupo Iusacell is the only carrier in Mexico that provides cellular,
wireless local loop, paging, and long distance services.
"This management change comes just in time for Iusacell to take
advantage of an upswing in the Mexican economy and the opening of new
markets. Iusacell is now positioned to take advantage of growth
opportunities and will concentrate on those markets with strong
potential," said Bartlett.
Strong Market Potential in Mexico
Mexico is the thirteenth largest economy in the world, and home to one
of the largest cities in the world, Mexico City. However, teledensity
lags behind other developed nations at about 9.5 phones per 100 people
(US teledensity is about 65 phones per 100 people).
Already this year, Mexico's stock market has risen about 15 percent,
with the peso rising 0.9 percent versus the dollar.
Telecommunications is one of Mexico's largest and hottest business
sectors. The telecommunications sector alone represents nearly three
percent of Mexico's Gross Domestic Product.
Babbio said, "All signs point to economic recovery in Mexico. That
makes this one of the world's greatest telecom investment
"While the peso devaluation has put Iusacell about two years behind
schedule, this new agreement enables us to get the company back on
track and realize the full potential of the Mexican telecommunications
Grupo Iusacell is the Mexican telecommunications company whose
cellular division serves four of Mexico's nine regions in the central
portion of the country, including Mexico City, covering 65 million
people, 70 percent of the country's total population. Grupo Iusacell
provides business communications services, frame relay, private
digital networks, video conferencing, business telephone systems, data
transmission, satellite communications, public telephone service,
local and long distance telephone service, and paging.
Grupo Iusa, founded in 1939, is one of the largest industrial groups
in Mexico, with interests in construction, automotive equipment and
financial services. It is wholly owned by the Peralta family.
Bell Atlantic Corporation (NYSE:
BEL) is at the forefront of the new
communications, entertainment and information industry. In the
mid-Atlantic region, the company is the premier provider of local
telecommunications and advanced services. Globally, it is one of the
largest investors in the high-growth wireless communication
marketplace. Bell Atlantic also owns a substantial interest in
Telecom Corporation of New Zealand and is actively developing
high-growth national and international business opportunities in all
phases of the industry.