In 2021 Axtel accelerates the step to exit Alfa —it is going for the second round of rapprochement among interested investors

Business

By CAPosts 19 January, 2021 - 09:00am 40 views

Once out of residential services, Axtel focuses on its business and government clients. His new challenge is to find a buyer and although he does not have a defined date, he could finalize an agreement during this year. The expectation of the analysis area of the Banorte-Ixe brokerage house is that it will occur in the first quarter of 2021.

The company based in San Pedro Garza García, Nuevo León -in northern Mexico-, revolutionized competition with its arrival in the metropolitan area of Monterrey in 1994. He had successes such as offering the television service "without schedule" in 2013 and symmetrical internet. That is, even residential customers could access packages with the same file upload and download speed over the internet.

© Courtesy. Axtel is going through its second round in the search for investors.

After ending the relationship with its residential clients, it makes it very clear before entering its website, the company is going for a new stage outside of Alfa. Almost four years after the merger of Axtel and Alestra to form part of the Alfa conglomerate - which owns 51% of that combined entity - the company is increasingly refining its businesses.

In an exclusive interview with Business Insider Mexico, Adrián de los Santos Axtel's chief financial officer, explains the steps to finding a good bidder.

Axtel's reasons for leaving the residential segment

Despite complaints from users of Axtel's services , there is no turning back. The company sold its former clients to izzi and Megacable between 2018 and 2019. It also left behind its most important data center in Querétaro, which is now owned by Equinix.

“The strategy that we have been following over the last few years has to do with aligning the company to trends, where it is moving the industry ”, says De los Santos.

And for Axtel, the business and government segments are better clients to offer their services. In addition, competing in residential services is not easy at all, as other companies have a lot of presence.

“When we sold the massive (residential) business we had around 300,000 subscribers. At that time Telmex had about eight million; The main cable companies as a whole -Televisa and Megacable- added another six or seven million subscribers, ”says De los Santos.

Axtel's presence among these types of subscribers was not even 1% of its competition. Even if it were to grow in this segment, it would need to attract customers at a rate of 50% and over four years to reach just one million customers. Unrealistic figures throughout the sector, explains the executive.

On the other hand, attracting more residential clients meant penetrating socioeconomic segments that could not pay for the quality of the company's service.

“It was really an economic decision, a decision of whether We really added value in the long term to see how long it was going to take us to reach a million subscribers against competitors who had already had it for a long time. Then better divest it at the right time. It was what pushed us, ”explains the manager.

Axtel goes for a second round in the search for a buyer

While Alfa welcomes the sale of Axtel -because it can give it resources to reduce its debt-, Axtel is concentrating on getting to the ideal investor.

He spent last year listening to offers. However, the offers of both the Axtel-Alestra entity and each individual company did not meet the expectations of the executives.

“In the second half of the year this process was limited to the possibility of interested investors throughout the company. (…) Once the proposals and conditions from investors were ready, we thought that it was not reflecting all the value that the two units should have, ”says De los Santos.

Among the investors who were interested, Axtel will make a new round to get the best offer in a kind of “open auction”. "We are looking for diverse interested investors to compete among themselves to try to find the best economic possibility and conditions for possible sale within this with a competitive process," says the executive.

Axtel-Alestra are telecommunications infrastructure and services firms and Information and communication technologies (ICT) have fiber optics. This asset is becoming increasingly important to carry mobile data, as it has great capacity. And it is a key element for the development of new technologies such as 5G.

Other companies can take advantage of the assets of Axtel-Alestra

The company was right to wait, as this appeal can be better assessed. "The market is still not correctly recognizing the value of the company, and there is ample room for a revaluation in the issuer," says a Banorte analysis of Axtel.

Meanwhile, some analysts consider that their assets can appreciate well between companies of mobile services. "(By selling residential fiber optics) it means that it abandoned its intention to become a 5G player, but it favors other actors who are willing to invest," considers Jorge Bravo, CEO of Digital Policy & Law.

On the other hand , Jesús Romo, director of Telconomia, considers that this next sale of Axtel-Alestra could be better separately. "Since leaving the mass segment, there was already a decision by Alfa to reduce its exposure to the ICT and telecommunications segment, due to the competitiveness of the mass market and the fact that the fixed segment is not as dynamic as the mobile one," says Romo.

En In a statement, Alfa indicated that it will continue to encourage those units to find the best value among investors . Meanwhile, De los Santos is in charge of getting the most out of this operation.

“'We're going calmly because we're in a hurry.' That is the way we are following this process: we are not under time pressure because we have an unfavorable competitive situation or because of a leverage that does not help us, far from it. But the premise of giving results is always the priority at Axtel ”, says De los Santos.

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Source: MSN