Telecom Argentina, the prominent Argentine telco, has completed the acquisition process of Telefónica de Argentina for approximately $1.245 billion. The move gives the local operator more steel and strength in the country’s telecommunication industry.
The Spanish telco brand Telefonica operates in Argentina under the Movistar banner. However, now, Telecom Argentina, also known as Telecom, will run the business following this takeover.
Telefonica provides mobile and fixed services in the South American market.
The news of the deal was confirmed by Telefonica in a recent regulatory filing to Spain’s securities detailing. It has been stated that TLH Holdco SLU, a subsidiary of Telefonica has sold its entire equity share in Telecom Argentina.
The sell-off aligns with the Spanish telco giant’s push to minimize its presence in Latin America. Also, the telecom giant has cut off thousands of jobs in its home country Spain as it seeks to balance is checks.
Telecom Argentina-Telefonica acquisition is scrutinized
Though Telecom Argentina and Telefonica’s acquisition has been finalized, the Argentine government is eager to investigate the scenario. The government plans to see whether the transaction leads towards a potential monopoly in the country in an attempt to ensure a level playing field for all the operators.
The Office of the President warned that “70% of telecommunications services would be controlled by a single economic group, creating a monopoly formed thanks to decades of state benefits.”
“The current regulatory framework establishes a system of control over transfers, assignments, and acquisitions of telecommunications service providers. The National Government is committed to preventing the formation of a new monopoly created through decades of state benefits, which would go against free competition and hinder the disinflation process,” the statement further reads.
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Telecom states legitimacy and lays out higher plans
However, Telecom has responded that it acquired Telefonica’s businesses via a highly competitive process. The telco also highlighted the possible fruits the deal would eventually bring forth. It’s reported that other companies such as DirecTV, Telecentro, Liberty Global, Claro, and Alpha Media were also bidding to secure Telefonica’s local operations in Argentina.
“Telecom will continue to develop the country’s digital infrastructure and increase fixed and mobile broadband coverage, and the deployment of fiber optics and 5G will be accelerated. Thus, Argentina will have a digital infrastructure of international level and quality, promoting the development of important sectors of the economy,” the Telco said in a statement.
The telco adds that in the near future, it will work in enhancing the 5G network coverage, and promote video on demand, the internet of things (IoT), fintech, eCommerce, Artificial Intelligence (AI), etc.
The deal is now headed to Argentina’s telco regulator ENACOM and the National Commission for the Defense of Competition (CNDC), with the former already telling off that regulatory measures are there to ensure a competitive market space for all.
But if the deal is nodded, Telecom Argentina will have its efficiency boosted reaching 41 million customers across the country which would translate to two-thirds in the country’s telecommunication industry.