Government to monitor Telefonica’s influence at Telecom

17 Oct 2007

Argentina’s government has created a two-person oversight board at former incumbent Telecom Argentina to monitor whether Spain’s Telefonica is able to affect competition by virtue of its stake in Telecom’s parent Telecom Italia (TI), reports BNamericas. The board comprises one representative of the competition watchdog CNDC and one from the telecoms regulator CNC. After two months the pair will report to their respective bodies on Telefonica’s influence at Telecom. The government also expects the board to evaluate all documents and information regarding Telefonica’s role in TI, to defend public interest in the Argentine telecommunications market.

Telefonica has become closely linked to TI due to its role in a consortium of mainly Italian firms that reached an agreement in April this year to indirectly acquire a 23.6% controlling stake in TI. The consortium’s principal move was to acquire TI’s controlling shareholder Olimpia, which has an 18% share in the group. In August, local investment group Grupo Werthein — the second largest shareholder in Telecom — issued a statement voicing concern that Telefonica could influence decision making at Telecom. However, certain Telecom board members believe the Telefonica-TI deal will not interfere in the telco’s structure. Telefonica says it will control only 1.5% of Telecom.