Telefonica de Argentina promises ARS6 billion investment in next three years

19 Dec 2007

Former incumbent Telefonica de Argentina (TdA), a unit of Spain’s Telefonica, will invest ARS6 billion (USD1.91 billion) in its domestic operations over the next three years, company president Eduardo Caride has said. As part of these investments, TdA will next year spend ARS950 million upgrading its fixed line services and about ARS750 million increasing its mobile penetration. Investments for 2009 and 2010 ‘will depend on technological developments in Argentina…including telecom operators’ possibility of offering TV services via internet,’ Caride said. Argentina’s legislation currently prohibits telecommunication companies from offering TV services, but it does allow cable TV operators to offer internet and voice services.

Asked about an update on the Argentine government’s probe into Telefonica’s indirect entry into the shareholding of its main Argentine competitor, Telecom Argentina (TEO), through the acquisition of a stake in Telecom Italia (TI), Caride answered that the matter ‘doesn’t relate to Telefonica de Argentina but to Telefonica of Spain.’ His comments come as the Argentine government is expected to announce the results of its monitoring of TEO’s board activity and to rule on whether it will allow Telefonica to take a stake in TEO. After having bought a 10% holding in TI, which is TEO’s biggest shareholder, Telefonica indirectly owns about 2% of TEO. This stake is too small to give Telefonica a seat on TEO’s board and the Spanish group has said it will respect its competitor’s independence. Nonetheless, the holding still conflicts directly with the law under which Argentine former telecommunications monopoly Entel was privatised in the 1990s. Entel’s privatisation created two companies; one operating in the north of the country and one in the south, which later became TEO and TdA respectively. Under the privatisation law, the two are banned from becoming shareholders in each other.