Sprint Corp. is in deep negotiations with owners of Mexican wireless operator Pegaso PCS to gain a stake in the carrier, sources close to the companies say.
An ownership agreement would give Sprint, which agreed to merge with MCI WorldCom Inc. last month, its first foray into the international wireless market. Sprint declined to comment.
Sprint already has a roaming agreement with the Mexican Code Division Multiple Access operator, which won a nationwide personal communications services license last year. Pegaso has launched service in Monterrey, Tijuana and Guadalajara and expects to introduce service in Mexico City before the end of the year.
Pegaso’s largest shareholder, Qualcomm spinoff Leap Wireless International Inc., did not comment. But sources indicate Sprint and others approached Pegaso after AT&T Corp.-which is looking for a Mexican wireless play-contacted the carrier’s financial partners with a possible deal. AT&T’s discussions with the financial partners were squashed once it was clear Leap would not relinquish CDMA technology to Time Division Multiple Access technology.
Pegaso “intended to continue to operate independently until AT&T offered financial investors an earlier out,” said a person familiar with the negotiations. “That did bring Sprint out of the woodwork … They would pay a premium to get in.”
AT&T declined to comment, but did indicate its interest in Mexico.
“AT&T along with its business partners in Mexico have publicly expressed interest in participating in several niches of the telecom business,” said Sue Flemming, spokeswoman for AT&T’s international business. “We have interest in potential alliances with players to enter the local loop and cellular market. We are considering all opportunities.”
Pegaso has a planned initial investment of about $1.3 billion to roll out service throughout Mexico. Press reports indicate Pegaso needs an estimated $600 million in additional financing to provide coverage to 70 cities by 2005.
