Telecom Argentina net profit soars despite antitrust investigation

11 Mar 2010

Fixed line incumbent telco Telecom Argentina has reported that its net profit for the quarter ended 31 December 2009 more than tripled compared to the same period a year earlier to ARS399 million (USD103 million), on the back of increased revenue from data and voice services. Net profit for full year 2009 increased 46% year-on-year to ARS1.4 billion, while annual revenue reached ARS12.2 billion, an increase of 15% from ARS10.6 billion in 2008. Turnover for 4Q09 totalled ARS3.37 billion, climbing 19% from ARS2.82 billion in the year-ago quarter. At 31 December 2009 Telecom Argentina reported 4.36 million fixed lines in service, up 2% year-on-year, while broadband customers stood at 1.22 million, an increase of 19% compared to end-2008. Meanwhile, the telco’s mobile division, Personal, ended the year with a total of 16.28 million wireless subscribers, 1.8 million of which were customers of Personal’s Paraguayan unit Nucleo. Around 69% of Argentine subscribers were pre-paid users. Telecom Argentina’s CAPEX for 2009 totalled ARS1.69 billion, up 6% compared to the previous year; the fixed line business received ARS803 million and mobile telephony the remainder. The company plans to invest just over ARS2 billion in 2010 to improve its 3G network.

In a separate story, Reuters reports that the Buenos Aires stock exchange has suspended Telecom Argentina’s shares, citing a court injunction issued on 8 March related to an ongoing power struggle among shareholders of the fixed line incumbent. According to TeleGeography’s GlobalComms Database, the country’s antitrust agency, the National Commission for the Defense of Competition (CNDC), ruled in August 2009 that Telecom Italia’s (TI’s) indirect stake in Telecom Argentina violated antitrust legislation and ordered the company to sell its 50% shareholding, as Spanish telecom group Telefonica, which acquired a 24.7% stake in the Italian firm through the Telco consortium in October 2007, already owns Argentina’s other fixed line operator Telefonica de Argentina, causing cross-ownership issues. In January 2010 an appeals court suspended the government’s 25 August 2010 deadline by which TI would be forced to sell its 50% stake in Sofora, the holding company that controls Telecom Argentina. Earlier this month the government decided to start over its antitrust review of TI’s 50% stake in Sofora, rather than pursue a current case that has become entangled in court.