Telefonica and AT&T team up in Mexico to take on America Movil

US telco, AT&T has signed a deal with Telefonica to allow the Spanish telecoms giant access to its network infrastructure in Mexico. The deal is intended to help both companies compete more aggressively with America Movil.

A report by Reuters suggests that Telefonica will use AT&T's 'last mile' infrastructure to connect customers to its fibre networks. The deal will deliver cost saving synergies of over $250 million per year, after the initial three-year transition period.

Telefonica Mexico Chief Executive Officer Camilo Aya told journalists in Mexico that the company was free to enter into similar deals with other operators in the country.

"You need a lot of scale to compete in this business,” Aya said.

AT&T's vice president for external affairs for Mexico, Monica Aspe, said that the agreement would be good for consumers and would boost competition in the country's telecoms sector.

“What this agreement does is strengthen the ability to compete,” she told Reuters.

America Movil boasts over 73 million subscribers in Mexico, while Telefonica's Movistar and AT&T Mexico have 25.8 million and 12.5 million subscribers respectively.