ALTÁN Consortium wins the international tender process for Red Compartida

Mexico City, 17 November 2016. Mexico’s Ministry of Communications and Transportation has announced today that the Altán Consortium has won the international tender process for Red Compartida, this Government’s most ambitious telecom project.

The Altán Consortium will be responsible for the design, installation, operation and upkeep of a wholesale mobile broadband network, that will facilitate the provision of current and future telecommunication services. The roll-out of Red Compartida will be carried out through a Public-Private Partnership (PPP), a project that is expected to generate investment in excess of $7 billion over the life of the concession.

Red Compartida will enable access to the most advanced 4G-LTE technologies to at least 92.2% of the country, ensuring these services in areas where traditional operators either presently do not reach, or where providing to these areas is not profitable. It should usher in an era of more competitive prices and improved service quality, transforming the telecom sector in Mexico and driving the country’s economic and social development.

“This has been a very demanding and transparent tender process, in which Altán proved that it had the most solid and trustworthy bid, surpassing all the minimum requirements by a wide margin. Now it is time to draw upon our technical and management expertise to give life to the project. We have the required industry experience, as well as the necessary financial and operational muscle. We are totally confident in the Mexican economy long-term and in Mexican institutions. Red Compartida will soon be a reality that will positively impact the daily lives of millions of Mexicans”, stated Eugenio Galdón, Chairman of Multitel and Altán Consortium’s representative.

“Everyone in the Consortium is rightfully proud at being entrusted this project, and are fully committed to fulfil Red Compartida’s mission to close the digital gap and to provide efficient network access to all Mexicans”, concluded Galdón.

Red Compartida is expected to commence operations on 31 March 2018. It will provide services via a new nationwide wholesale network on the 700 MHz spectrum using 4G-LTE technology, fully IP-based and 5G ready. Once completed, the new wholesale network will offer retail operators cutting-edge broadband mobile data and voice services. The concession will have a term of 20 years with an option to extend for an additional 20 years.

“We are excited to be building the world’s largest open access, wholesale telecom network alongside our Mexican and international partners. We are committed to ensuring that Red Compartida provides best-in-class service and coverage”, stated Chris Koski, Global Head of Investment Strategy for Morgan Stanley Infrastructure, Altán Consortium’s leading shareholder with a 33.38% stake.

“At Axtel we are very satisfied to be part of the winning proposal. Although we, as Axtel, will not be part of the management of Altán we will offer all our expertise towards an efficient roll-out of the wireless broadband network. Thanks to this new infrastructure, we will also develop our own mobile offer for both existing and new clients” commented Axtel Managing Director, Rolando Zubirán.

“The China México Fund was created to drive optimal structural reform in Mexico, such as that carried out in the telecom sector. Our participation in Altán and the Red Compartida project clearly underpins the Funds commitment to propel progress”, stated César Urrea, director of the China Mexico Fund, a consortia member.

This project allows Mexico to progress in the industry trend of segregating the management of infrastructure from the management of services provided to end-users. This business model, which can already be observed in the fibre optic and transmission tower segments, enhances the efficiency of the industry as a whole, thanks to sharing basic infrastructure and allowing both infrastructure and service operators to concentrate on their core businesses and on being more competitive. Red Compartida will drive the growth of the sector by making highly efficient infrastructure available to all telecom operators.

The Altán Consortium is made up of a balanced and robust group of international and Mexican investors, with proven experience in infrastructure and telecoms network management, coupled with investment funds with a long-term commitment, to guarantee the success of the project. The shareholders have committed 750 million dollars as initial capital.

Strategic partner:

• Grupo Multitel, whose Chairman and CEO is Eugenio Galdón, is the Consortium’s strategic partner and contracted manager, contributing its technical expertise and experience in piloting similar-sized or larger projects, as required by the rules of the tender. Its involvement in landmark projects include the roll-out of a cable network in Spain to create the first integrated quadruple-play telecom operator (fixed and mobile telephony, Internet and pay TV), which has been operating for almost 20 years under the ONO brand. Grupo Multitel has spearheaded the creation of the Altán Consortium; while Joaquín Coronado, a Grupo Multitel partner with vast experience in the telecom sector in various countries, has, as Executive Director of Altán’s offer, prepared the offer leading a team of fifty professionals.

Financial investors:

• The project’s largest investor is Marapendi Holding B.V., an indirect subsidiary of North Haven Infrastructure Partners II, an infrastructure fund with a value-add strategy to invest in OECD countries around the world, managed by Morgan Stanley Infrastructure. Morgan Stanley Infrastructure is the private infrastructure investment platform within Morgan Stanley Investment Management and among its various funds manages a total of $5.2 billion, with additional co-investment availability of up to $2.2 billion. Its participation is 33.38%.
• Miguel S. Escobedo, a prestigious Mexican lawyer and initial supporter of Red Compartida, is participating in the project through Hansam, S.A. de C.V., holding 9.35% of the consortium.
• Eugenio Galdón, Chairman of Multitel, will be investing in his own right through Isla Guadalupe Investments with a participation of 3.34%.
• FFLATAM-15-2, is the trust issuer of fiduciary certificates No. F / 2292, held in Banco lnvex, SA, a Multiple Banking Institution pertaining to lnvex Grupo Financiero, as Fiduciary, entered on July 24, 2015, with the ticker FFLA2CK-15. Its participation is 6.54%.
• Caisse de dépôt et placement du Québec(CDPQ), one of North America’s largest pension fund managers, in partnership through a co-investment platform with CKD-IM, a vehicle which brings together Mexican institutional investors (including four of the largest Afores). This participation totals 12.68%.

Bilateral and multilateral development institutions:

• The International Finance Corporation (IFC), is a member of the World Bank Group that finances private sector ventures. Its participation is 3.34%
• The China Mexico Fund (CMF), with a participation of 23.36%, is a fund specifically created to invest in and finance infrastructure projects in Mexico. IFC Asset Management Company LLC (AMC) is owned by IFC and manages the CMF.

Local industrial partners:

• Telecom companies Axtel and Megacable also hold a stake in Altán through a series of non-voting shares and without involvement in management. Each have a participation of 4.01%.