Telecom Argentina Can Get Head Start on TV, Official Says

  • Carrier would be allowed to offer content after merger
  • Cablevision would need to absorb Telecom in a deal: Estol

Telecom Argentina SA would be allowed to offer video content ahead of its phone competitors if it’s acquired in a merger by cable provider Cablevision SA, a government official said.

Regulatory permission would be granted even though telecom companies such as Telefonica SA will remain banned from offering video content until 2018, the investment promotions secretary at the Argentine Telecommunications Ministry said. That would give Telecom Argentina a head start on providing packages of phone, internet and TV service before its competitors are allowed.

Cablevision’s controlling owner, Grupo Clarin SA, announced plans earlier this month to spin off its cable and internet business, a move that could lead to a merger with Telecom Argentina. Speculation about a deal has mounted because Fintech Advisory LLC, the investment firm run by David Martinez, holds stakes in both companies. Clearance from regulators to offer video comes down to how a merger is executed, said the government official, Clarisa Lifsic de Estol.

“If Cablevision absorbs Telecom Argentina, the merged company will be allowed to offer video content before 2018,” she said in an interview at her Buenos Aires office. “In that case, there won’t be any regulatory issue at first sight. If Telecom Argentina is the one absorbing Cablevision, the merged company won’t be allowed to do it until 2018, when the market will be open to everybody.”

Telecom Argentina declined to comment on market speculation, its press department said in an e-mailed statement.

“We aren’t planning a merger,” said Martin Etchevers, a Grupo Clarin spokesman. 

Clarin rose 1.5 percent to $20.05 in London. Telefonica slid less than 1 percent to 8.84 euros in Madrid.

The spinoff from Clarin makes a Cablevision merger with Telecom more likely, said Jose Maria Cao, a Buenos Aires-based corporate analyst at TPCG. “In fact, in their last conference call with investors, Telecom’s management emphasized it was seeking partnerships and alliances, even with competitors,” he said.

Foreign Investment

More international investors are evaluating Argentina because of President Mauricio Macri’s plans to overhaul telecommunications regulation, Estol said. His administration intends to send a bill to Congress before the end of the year to replace the media and digital laws so that both industries are regulated under the same framework.

“With the new law there will be more competition and with more competition there will be more quality and lower prices,” Estol said.

AT&T Inc., whose acquisition of DirecTV last year gave it satellite TV services in Argentina and other parts of Latin America, is among those touching base with the government, Estol said.

“Everybody is coming to analyze how the market will be once the new bill is approved -- strategic players such as AT&T or investment funds which aren’t strategic,” she said.

Virgin Mobile Latin America Inc., a mobile-phone reseller that started operating this year in Argentina, is among the newcomers offering telecommunications services since Macri was elected. Many telecommunications infrastructure companies, including mobile-phone tower operators American Tower Corp. and SBA Communications Corp., are also studying the country, Estol said.

“We are rapidly achieving our main goal: to improve people’s communications,” she said. “4G penetration is increasing at double the pace compared with other Latam countries. We were the fifth in Latam and we are already the third. By year-end we will be the second.”

First-ranked Uruguay, with 51 percent penetration, will be hard to surpass given its small size, she said.

AT&T, American Tower, SBA and Virgin Mobile didn’t immediately respond to requests for comment.

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