Dallas, Texas - AT&T, the second-largest US mobile-phone carrier, agreed to buy Grupo Iusacell from billionaire Ricardo Salinas for $2.5 billion to expand further into Latin America.

AT&T is gaining 8.6 million subscribers with the purchase of closely held Iusacell, the third-largest wireless operator in Mexico that has struggled to compete against Carlos Slim’s America Movil. The price includes $800 million in debt. The acquisition will take place after Salinas closes a deal to buy the 50 percent of Iusacell owned by Grupo Televisa, AT&T said in a statement.

AT&T is expanding into Mexico after agreeing earlier this year to pay $48.5 billion for DirecTV, which provides satellite-TV service in the US and Latin America. Four months ago, President Enrique Pena Nieto signed a telecommunications overhaul into law that promotes competition and reinforces oversight of the telecommunications industry.

"Our acquisition of Iusacell is a direct result of the reforms put in place by President Pena Nieto to encourage more competition and more investment in Mexico," AT&T Chief Executive Officer Randall Stephenson said in the statement. "Those reforms together with the country’s strong economic outlook, growing population, and growing middle class make Mexico an attractive place to invest."

AT&T Prowling

Dallas-based AT&T has been on the prowl specifically for deals in Latin America and Mexico. In September, AT&T Chief Strategy Officer John Stankey said that Mexico was poised for investment and that he sees a lot of options, both near-term and long-term, in Latin America.

"If we weren’t looking at Mexico and Latin America more broadly and thinking about what opportunities there were to further shareholder returns down there, and begin to diversify our revenue sources, I think we’d be asleep at the wheel," Stankey said at an investor conference. He met with Mexican telecommunications regulators that month to discuss the market and the new laws designed to ignite investment.

While the transaction is subject to review by Mexico’s telecom regulator, AT&T said it expects to complete the deal in the first quarter, according to the statement.

The May agreement to buy DirecTV - a deal that’s still awaiting regulatory approval - marked AT&T’s first push outside the US in more than a decade as it tries to counter slowing growth in its home market.

America Movil

AT&T's corporate headquarters in Dallas, Texas

"We feel, as we have said, that we can get the DirecTV deal done early next year," John Stephens, AT&T’s chief financial officer, said in an interview. "Sometimes opportunities come up and we make decisions and act accordingly."

AT&T was among the companies that America Movil contacted about buying $17.5 billion of Mexican wireless and landline businesses, people with knowledge of the matter said in September. America Movil has said the buyer needs to be new to the Mexican market to create more competition.

"It’s surprising that this comes before the DirecTV deal is closed," Walt Piecyk, an analyst with the global investment firm BTIG, said during an interview. "It could be that Salinas was ready and they had to move. They’ve been looking at Latin America and this deal may be an early sign that AT&T has an interest in the assets of its former partner America Movil."

As part of the deal, Salinas is keeping the company’s fiber-optic unit, Totalplay, which has more than 130,000 Internet, landline, and pay-TV users in Mexico City, Guadalajara, Cuernavaca, and Toluca. Totalplay plans to expand to 7.5 million households across 24 Mexican cities over the next five years, from 1.5 million households currently.

"Difficult Decision"

AT&T said it plans to expand Iusacell’s wireless network beyond the 70 percent of Mexico’s population that it currently reaches.

"Salinas had a very difficult decision to make," Luis Nino, a spokesman for Salinas, said in a phone interview. "He would like nothing more than to continue with the company, but he realizes that to compete with force and take Iusacell where it should be, it needs a company like AT&T."

Televisa had just agreed to sell its stake to Salinas in September for $717 million, taking a loss on its investment. Salinas originally said he was looking for a "world-class strategic partner" in Iusacell.

Mexico City-based Televisa didn’t immediately reply to requests for comment.

Capital Spending

AT&T also cut its projection for capital expenditures in 2015 by 14 percent to about $18 billion. The reduction was due to efficiencies from the better-than-expected progress of its network upgrade, Stephens, the CFO, said last week.

The company announced a three-year network overhaul called Project VIP that would cost about $21 billion a year ending in 2015. The spending cut isn’t related to mergers and acquisitions costs, Stephens said.

AT&T shares rose 0.7 percent to $35.17 in extended trading after the deal was announced. They have declined less than 1 percent this year.

"AT&T has very interesting plans for this market," Nino said. "It wants to take advantage of the US and Mexican markets - they want to take advantage of the synergies they have, the critical purchasing power of a market that size. It will make it a sensational competitor."