Holland & Knight was the lead adviser to Spanish telecom company Telefónica on an unprecedented  long-term wholesale deal with AT&T in Mexico.

Galicia Abogados was counsel to AT&T.

The deal will allow Telefónica to use AT&T's wireless last-mile equipment — the final link of telecommunications networks that includes towers, antennae and fiber-optic cables — to deliver service to consumers.

After a three-year transition period, Telefonica will see savings of $254 million per year plus an even greater debt reduction, Reuters reported. Financial terms of the deal that closed Nov. 21 were not disclosed.

Holland & Knight provided legal, regulatory and antitrust advice to Telefónica on the transaction. The team advising Telefónica was led by Mexico City-based partner Luis Rubio Barnetche and included partner Octavio Lecona. They were assisted by partners Emma Solaun in Miami and Lance Myers in  and Marisa Marinelli in New York.

Carlos Chávez, partner at Galicia Abogados, was counsel to AT&T.

The deal required extensive analysis, considering Telefónica and AT&T are direct competitors in Mexico. Regulatory advice also was needed because this is the first time a mobile operator has returned all of its spectrum holdings to the Mexican government on a staggered basis.

The holdings are no longer needed because Telefónica's traffic will be carried on AT&T's radio access network. Holland & Knight also assisted with the drafting of the wholesale access services agreement, which was negotiated and executed within a three-week time frame.

"It is expected that in the coming years we will hear about similar deals to the one struck by Telefónica and AT&T, which may be used as a road map for transactions to come," Rubio said. "The scarcity and cost of the spectrum will certainly drive mobile operators to look for means to use such spectrum more efficiently and reduce costs, but not at the expense of quality of service."

While keeping its own core network and associated systems, Telefónica will continue to provide mobile services to its business and end customers throughout Mexico by means of AT&T's existing and future wireless infrastructure.

Telefónica's customers will also benefit from future technologies, including 5G, when it is deployed by AT&T. After a three-year transition period, Telefónica will realize savings of $254 million per year, the company said.

"The long-term wholesale agreement entered into by Telefónica and AT&T in Mexico is partially a result of new technological solutions known as Multi-Operator Core Network that allow for a radio access network to be connected to multiple core networks," Lecona said. "Another factor is that the 2014 Mexican telecommunications law foresaw that technological advances would facilitate and foster the use of spectrum in more efficient manners."