AT&T; Announces $1-Billion Pact With Mexico’s Alfa : Telecommunications: The deal is a milestone in the wake of Telmex monopoly’s privatization.

AT&T; Corp., seeking to cash in on Mexico’s appetite for better communications, Wednesday announced a $1-billion venture with Mexican conglomerate Grupo Alfa to provide business and residential phone service.

The entry of the giant U.S. telecommunications company in the market is one of the major milestones since the telephone monopoly Telefonos de Mexico was privatized in December, 1990.

“This agreement accomplishes a major corporate priority for AT&T;: to expand our communications service throughout North America,” AT&T; Executive Vice President Victor Pelson said.

The company plans to spread the investment out over four to six years, largely ahead of a government schedule to fully open Mexico’s telecommunications market to foreign competitors in January, 1997.

“We expect the market in Mexico to grow dramatically over the next decade, and this is going to require an enormous amount of capital,” Pelson said at a news conference with Alfa executives.

The alliance is one of a handful of billion-dollar partnerships announced since last January’s launch of the North American Free Trade Agreement by the United States, Canada and Mexico.

“We were early and outspoken believers in NAFTA,” Pelson said, noting that AT&T; employs 8,000 Mexicans at manufacturing plants in Mexico and has handled long-distance traffic with the nation since 1927.

Despite a rapid and ongoing overhaul, Mexico has only eight phone lines for every 100 inhabitants.

The country’s telecommunications market has been one of the world’s fastest-growing since Mexico’s Grupo Carso and minority partners SBC Corp. and France Telecom bought the phone monopoly also known as Telmex.

Grupo Carso is headed by Carlos Slim Helu, a major Mexican industrialist who also holds a 15% stake in Grupo Alfa.

MCI Communications Corp., GTE International Telecommunications Inc., Sprint Corp. and Bell Atlantic Corp. have also announced plans to enter Mexico.

“We expect the market in Mexico to grow and grow dramatically,” Pelson said. “Right now there is room for a lot of companies in Mexico.”

Alfa Chief Executive Dionisio Garza Medina said Alfa’s share of the voting equity would be 51% and AT&T;’s would be 49%.

The companies said the alliance would combine AT&T;’s range of brands, products and services and its reputation, technology and network expertise with Alfa’s broad customer base and local experience in high-growth industries.