Axtel, S.A.B. de C.V. (BMV:AXTELCPO; OTC:AXTLY) (“AXTEL” or the “Company”), a Mexican fixed-line integrated telecommunications company, announced today the signing of a Memorandum of Understanding with Alfa S.A.B. de C.V. (”ALFA”) and Alestra S. de R.L. de C.V. (“ALESTRA”), ALFA’s wholly-owned telecom subsidiary, to merge AXTEL and ALESTRA (the “Transaction”). Under the agreed terms, AXTEL will survive as an operating and publicly-traded holding company and is expected to issue new shares to be held by ALFA representing approximately 51% of the combined entity ownership.

Per this agreement the Board of Directors of AXTEL will be integrated by Directors nominated by ALFA and AXTEL’s shareholders, Messrs. Alvaro Fernández Garza and Tomas Milmo Santos will be Co-Chairmen of the Board and strategic decisions will be approved by mutual consent between these two groups. Mr. Milmo will also co-lead, together with a Director elected by ALFA, an Executive Committee that will oversee these strategic decisions and, among others, approve the Post-Merger Integration (PMI) plan and the initial organizational structure of the combined entity. At closing, Messrs. Rolando Zubirán Shetler and Felipe Canales Tijerina will be appointed as Chief Executive Officer and Chief Financial Officer, respectively, of the combined entity.

The new entity will have a more robust network and commercial operation, including 37, 500 km of backbone, metropolitan and FTTH fiber optics network; 6,000 m2 of data center space; and a portfolio of enterprise customers generating more than 11 thousand million pesos in pro-forma annual revenues and more than 4 thousand million pesos in pro-forma revenues from consumer and other segments.

The transaction is expected to generate EBITDA synergies from economies of scale in expenses, network integration efficiencies and transfer of skills. Additionally, the combined entity will generate financial synergies from an improved capital structure.

The merger of AXTEL and ALESTRA is expected to create an entity with a stronger competitive position and improved capabilities to provide telecommunication information technology services to enterprise customers and FTTH-based triple play offers to the high-end consumer segment.

“The merger of AXTEL and ALESTRA will create significant value to our shareholders. Our customers will also gain from the consolidation of a service provider with larger scale and stronger commercial and network infrastructure” said Mr. Milmo Santos, AXTEL’s current Chairman and CEO. “AXTEL’s shareholders will benefit from the evident synergies resulting from the combination of AXTEL and ALESTRA’s operations, which is a key strategic action within the context of the post-reform telecommunications industry in Mexico. I am very optimistic about the prospects of this new company” further mentioned Mr. Milmo Santos.

The Transaction and its most relevant terms and conditions have been approved by both AXTEL’s and ALFA’s Board of Directors. Closing of the Transaction is subject to the completion of confirmatory legal, financial and operating due diligence, regulatory and corporate approvals and definitive contractual agreements. The Transaction is expected to close by the end of this year or early next year.

Citigroup is acting as financial advisor to AXTEL on this transaction.

About AXTEL

AXTEL is a Mexican telecommunications company with significant growth in the broadband segment, and one of the leading companies in information and communication technologies solutions in the corporate, financial and government sectors. The Company serves all market segments - corporate, financial, government, wholesale and residential with the most robust offering of integrated communications services in Mexico. Its world-class network consists of different access technologies like fiber optic, fixed wireless access, point to point and point to multipoint links, in order to offer solutions tailored to the needs of its customers.

AXTEL’s shares, represented by Ordinary Participation Certificates or CPOs, trade on the Mexican Stock Exchange under the symbol “AXTELCPO” since 2005.

Forward-Looking Statements

This release contains certain forward-looking statements regarding the future events or the future financial performance of AXTEL. These statements reflect management’s current views with respect to future events or financial performance, and are based on management's current assumptions and information currently available and are not guarantees of the Company’s future performance. The timing of certain events and actual results could differ materially from those projected or contemplated by the forward-looking statements due to a number of factors including, but not limited to those inherent to operating in a highly regulated industry, strong competition, commercial and financial execution, economic conditions, among others.