The widely reported sale by international service provider Telefonica of its Argentinian division to Telecom Argentina for US$1.245 billion, a deal agreed in February, is now on hold, apparently by order of Argentina’s government.
Reuters reports that late last week Argentina's presidential office said it had issued a preventive measure to suspend Telecom's acquisition of Telefonica's local unit, claiming the pending merger could lead to excessive market concentration.
This follows the news, soon after the deal was announced, that Argentina’s telecoms regulator Enacom and competition authority la Comisión Nacional de Defensa de la Competencia (CNDC) had been instructed by President Javier Milei to investigate whether the deal would create a monopoly.
Since then, a recommendation from the CNDC has raised concerns about the impact of the merger on market fairness.
The government appears to be worried that a new entity formed by the takeover would enjoy a market concentration of 61% in the mobile telephone sector, 69% in fixed lines and up to 80% in residential internet services in some areas of the country. The suspension will therefore remain in place until the situation has been more thoroughly analysed.
Telefonica said in February that it was selling its unit in the country to Telecom Argentina as part of a strategy to reduce its exposure in Latin America.
Reuters says that Telecom Argentina, which is partially owned by Argentine media conglomerate Clarin Group, has expressed its intent to continue investing in the country's telecom infrastructure, particularly in expanding 5G and fibre optic networks.
Indeed, last week it announced an investment of 1.4 billion pesos (about US$1.3 million) to strengthen the communications infrastructure in Gualeguaychú, a city in eastern Argentina, with a focus on fibre to the home and high-capacity mobile networks.
Telecom Argentina says it plans to cooperate with authorities and hand over all relevant information needed to assess the transaction.
