Telecom Argentina probe extended by up to two months

21 Dec 2007

Incumbent telco Telecom Argentina (TEO) has said the Comision Nacional de Defensa de la Competencia (CDNC), the Argentine competition authority, has ruled to extend its investigation into the company by up to two months. In October, the government put two observers on TEO’s board to monitor activities and make sure that there was no undue influence from fellow incumbent Telefonica de Argentina (TdA) via parent Telefonica of Spain. Earlier this year the Spanish group bought a 10% stake in Telecom Italia (TI), which is a 50% partner in the joint venture Nortel Inversora, which owns around 55% of TEO. Therefore Telefonica has an indirect 2% stake in TEO. This stake is too small to give Telefonica a seat on TEO’s board and the Spanish company has said it respects its competitor’s independence. However, the holding conflicts directly with the law under which Argentine telecommunications monopoly Entel was privatised in the 1990. Entel’s privatisation created two companies, one operating in the north of the country and one in the south. Those companies later became TEO and TdA respectively. According to the privatisation law, TEO and TdA are banned from becoming shareholders in each other.