Telefónica Exits Argentina with $1.25B Sale to Telecom, Prompting Oversight

Spain’s Telefónica announced on Monday that it has sold its Argentina operations to local telecommunications giant Telecom in a deal worth $1.25 billion. According to a statement from the companies, the agreement was signed and finalized on the same day.

Telecom, which operates in Argentina, Paraguay, and Uruguay, owns several major digital services, including internet provider Personal, the digital wallet Personal Pay, and streaming platform Flow. Per a statement from the company, the acquisition will bolster Argentina’s broadband, fiber optic, and 5G infrastructure. The Global Media and Internet Research Project estimates that Telecom currently holds 35% of Argentina’s telecommunications market, and the deal could increase that share to 55%.

Beyond the immediate transaction value, the deal is expected to drive significant investment in network expansion, a company statement noted. “In addition to the sum directly involved in the operation, which amounts to US$1.245 billion, in the following years there will be intensive capital investment, with a focus on deployment and capillarity of fiber optic in all territory covered by the company, in the deployment of mobile 5G sites in the same zones, and in the expansion of value-added services, such as on-demand video, the internet of things, corporate products, fintech, e-commerce, artificial intelligence, and cloud services,” the release detailed.

Telefónica, which has been restructuring its Latin American holdings, emphasized that the sale aligns with its broader strategy. “This operation […] is aligned with the strategy of gradually reducing exposure to the Latin American market,” the company stated in a filing to Spain’s National Securities Market Commission.

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However, within hours of the announcement, Argentina’s presidency confirmed that two regulatory bodies—the National Entity for Communications (ENACOM) and the National Commission for the Defense of Competition—would scrutinize the acquisition to determine if it leads to monopolistic control over the industry.

A statement from the presidential communications team expressed concerns that the merger could consolidate nearly 70% of the country’s telecommunications services under a single corporate entity. “This acquisition could leave approximately 70% of telecommunications services in the hands of just one economic group, which would generate a monopoly formed thanks to decades of state benefits that the aforementioned company has received,” the statement read. It further warned that such a development could hinder efforts to curb inflation and impact consumer choice.

The government emphasized its commitment to maintaining competition and accessibility in the sector. “The National Government will take all measures to guarantee users’ right to choose, free competition, and accessibility to telecommunications services,” the statement concluded.

Source: Buenos Aires Herald