With an investment of US$ 1.245 million, Telecom bought Telefónica de Argentina

With an investment of US$ 1.245 billion, Telecom acquired the Argentine subsidiary of Telefónica, it was reported. It was after an intense competitive process. And after Telefónica decided in 2019 to reduce its exposure in the region.

"Telecom will continue to develop the country's digital infrastructure and increase fixed and mobile broadband coverage, while accelerating the deployment of fiber optics and 5G. In this way, Argentina will have a digital infrastructure of international level and quality, boosting the development of broad sectors of the economy," the company said in a statement.

Telefónica Móviles de Argentina SA provides fixed, mobile and value-added telecommunications services in the country.

This acquisition is taking place in a context of increasing consolidation of the telecommunications industry worldwide , which is undergoing major transformations with the emergence of new players and transactional technologies, the demand for capacity and intensive use of networks by large global platforms and the need to articulate infrastructure and service synergies to satisfy exponentially increasing traffic.

Roberto Nobile, CEO of Telecom, said: “With this operation, Telecom demonstrates its commitment to continue investing in Argentina within the framework of current macroeconomic conditions that add certainty and stability to private and competitive investment.”

For the operation, Telecom had the BBVA bank as advisor for the transaction and initial financing from several banks, the aforementioned BBVA, Deutsche Bank, Santander and ICBC for US$ 1,170 million.

Market sources stress that this was not a "hostile" takeover of Telefónica by a strong competitor, but rather the acquisition of an asset that was deteriorating, posing risks to its customers, networks, quality of service and employees.

In a statement from the Office of the President, it is stated that free competition among users will be defended.

Telecom's market capitalization is US$7.3 billion and Telefónica's is US$1 billion. Its competitors, some of which have just entered the Argentine market, have more than eloquent values: AMX, the owner of Claro, is US$87 billion, and Elon Musk's Starlink, officially promoted, is US$350 billion. President Javier Milei has just met with Musk in the United States, in a meeting that is repeated on every presidential trip to that country.

Telecom is 40% owned by Cablevisión Holding , a shareholder of Grupo Clarín; 40% by Fintech, owned by Mexican businessman David Martínez; and the remaining 20% ​​is listed on the New York and Buenos Aires stock exchanges.

The operation will take advantage of the territorial and customer complementarity of both companies and their greater investment capacity, making it possible for their technological solutions and services to have the same quality for all customers, regardless of the area where they are located.

The company is complying with regulations and making the appropriate regulatory submissions.

In the coming years, the US$ 1.245 billion will be added to intensive capital investments focused on the deployment and capillarity of fiber optics throughout the territory covered by the company, along with the deployment of 5G mobile sites in the same areas and the expansion of value-added services such as video on demand, the Internet of Things, corporate products, fintech, e-commerce, artificial intelligence and cloud services.

Since 2017, Telecom has invested US$ 6 billion in infrastructure, guaranteeing the quality and coverage of its service networks in Argentina, Paraguay and Uruguay. Telecom provides Personal services, Telecom's mobile internet network, which is the fastest in the country and has been awarded by Speedtext by Ookla for 5 consecutive years. It is the first mobile operator in Latin America to achieve this feat.

For this level of connectivity, it has 8,000 4G sites and 265 5G sites throughout the country. The fiber-to-the-home network has more than 94,700 kilometers in its different technologies, it was reported.

From this data it can be deduced that Telecom Argentina is the company with the largest investment in infrastructure in the country in recent years and, according to company sources, it is committed to continuing on this path of developing a network with quality of service and technological reliability. It does so at a time of growing local and global demand for these services by sectors that require high standards of connectivity, from the knowledge economy and artificial intelligence, to the countryside, industry, energy, mining, tourism, health and education, which the company hopes to be able to supply.

Telecom thus adds a company like Telefónica that was leaving the country and prevents a divestment process from becoming more pronounced. "This does not seek to destroy but to build and strengthen an operation that was weakening rapidly," said sources from the acquiring company.

A relevant issue is that Telecom and Telefónica are complementary in many of their operations in terms of geography and customers , so there is no concentration in most of the Argentine territory. On the contrary, it is claimed that the operation serves to immediately improve the quality of service and national coverage.

But there is also a multiplicity of players, including those that already exist and those that have joined and continue to appear. From Claro, to Starlink or the recently announced alliance between Amazon and Direct TV. On the Internet there are other important players such as Telecentro, Iplan, cooperatives and local companies.

The strategy of companies around the world is one of alliances that seek cooperative agreements, sharing open networks, synergies to gain efficiency and sustain the high levels of investment that digital life requires.

The Government has expressed itself on many occasions in favour of the entry of foreign telecommunications operators and the need for private investment in infrastructure, so an investment of US$ 1,245 million, plus the multi-million dollar annual investments required, would be read as something favourable, according to the telecommunications environment.

There was concern there about Telefónica's plans to leave Latin America, as happened in other Latin American countries, which weakened the entire sector. This purchase by Telecom, on the other hand, is seen in those sectors as a strong boost.