Nextel Aims for All-Digital, Seamless Wireless Network : Telecommunications: U.S. mobile radio provider to invest $165 million in Mexican company.

Nextel Communications Inc. said Monday that it will invest $165 million for a 22% stake in Corporacion Mobilcom of Mexico, creating the first seamless, all-digital wireless communications network in North America.

Rutherford, N.J.-based Nextel, which provides mobile radio services in major U.S. cities, recently announced a similar deal with Clearnet Communications Inc., a leading Canadian wireless communications company.

Under the tentative agreement, Nextel would buy $122.5 million of new and outstanding shares in Mobilcom, a leading wireless telecommunications provider in Mexico. Mobilcom would merge with its affiliate, Radiophone, before closing the deal.

Nextel would also loan Mobilcom another $42.5 million through a note that is forgivable under certain conditions. It could also be converted at Mobilcom’s option into an additional stake of up to 7.65% in the company.

Moreover, Nextel has a three-year option to buy an additional 13% of Mobilcom for $96.9 million.

Mobilcom is majority-owned by the Valladares Group, a privately owned Mexican company with interests in telecommunications, broadcasting, publishing, steel, construction and agriculture.

Its other shareholders include Associated Communications Corp. unit Associated SMR Inc., Wireless Ventures of Mexico Inc. and an affiliate of the Carlyle Group.

Separately, Associated Communications said it expects about $15 million in proceeds from Nextel’s purchase of a 5% stake in Mobilcom from Associated SMR. The unit now holds a 19.9% stake in Mobilcom and 10.03% of Radiophone.

Nextel and Mobilcom have agreed to pursue sharing frequencies along the border between the United States and Mexico. Nextel said that would create additional capacity for Nextel’s U.S. network, particularly in San Diego, Southern California and along the Texas-Mexico border.

“The North American Free Trade Agreement adds to the significance of the Nextel-Mobilcom alliance,” said Brian McAuley, Nextel’s president and chief executive.

“Integrated, all-digital wireless communications will no longer stop at the border and will instead become a powerful stimulant for business and commerce among North American countries,” he said.

Mobilcom and Clearnet will use Motorola Integrated Radio System technology, the same technology chosen by Nextel.

Nextel stock was unchanged at $37.50 in Nasdaq trading.