The market of Telecommunications In Latin America, one of the most significant corporate movements of recent times is witnessing: the Sale of Telefónica assets In the region. Although it is a process that began in 2019 in different countries, in Argentina it has other implications and marks a milestone in the consolidation of the sector. It also marks the withdrawal of foreign capital and the concentration in local companies.
Making a little history, in the late nineties the privatization of Entel, That years ago he could not provide telephone services, and the memiosose will remember that a telephone house had a much higher price those that did not have it and in the rental contracts losing the line was equivalent to horror fines. Although many criticized this tender was a very interesting model that allowed in a short time to move from the telephony cart to having world -class services. This privatization model divided the country into two, North and South Zone, awarding the operation to 3 Old World Operators, Stet of Italy and France Telecom along with local partners such as the Perez Companc group that operated for 10 years exclusively the northern and telephone zone of Spain along with Techint the Southern Zone.
A very successful process since large investments were made, the country was digitized, suppliers came from all over the world, many young professionals were hired and postgraduate degrees were created in very prestigious universities.
After the year 2000 and fulfilling strict quality goals imposed by the regulator, the market was opened to new operators who came to provide different services especially in the corporate segment “Cherry Picking” and long distance, there was also a Start Up fever that then the Internet bubble gave way to acquisition and mergers processes, entering to operate in Argentina the Mexican giant of the Telmex group and develop Datco-Silica, Supercanal and Telecentro.
I do not want to forget the telephone cooperatives created already in Entel era because passing General Paz did not arrive with services the state company, and then the electric cooperatives that with its ironed rates became suppliers of Internet and TV services, pioneers in the 2010 years in starting to provide its services with fiber optical to the home. An ecosystem that only occurs in Argentina and that is the result of the will of some neighbors due to the inoperance of the State to provide public services in their community that form public service cooperatives.
Then began the mobile services that joined “Movicom” in the AMBA that then with the withdrawal of Bell South became part of Movistar.
A similar process happened with the bidding of north and south zone cell phones, in general all spectrum tenders were slow but then the speed of deployments and services compensated for the delays in these processes. Curious fact were the sizing errors of the first cellular networks, which caused headaches to the managers of cellular companies and European suppliers especially the Nordics, since they were out of the duration of Latin calls, which caused them to grow out of any business plan paid to “expert consultants” the networks.
Following the Racconto, then came 2001 and there the investments stopped completely, and in 2010 the National Government realized this and put together a working group between the public, private sector and unions to give birth to the project of the land network or national backbone These to exchange fiber optic hair in those places where private ones had networks.
But well this made tenders of lower amounts, so they were not so reditual for some with which it was decided to make a network where there was already and what led to what happens today, there are still places to illuminate, the network became obsolete, etc., etc. And better times came and the deprived continued to deploy networks and also appeared in some province the SAPEM (state telecommunications companies), which I do not know why but all politicians love them, ICT sound glamorous but they are entrepreneurs of intensive capex and Opex, the industry has been reducing its ARPU (average income per subscriber) The app and another because it is a very regulated industry and with very high taxes throughout the region, everyone wants a slice, whether for sales, airspace or other combinations the mayors are very creative in this matter.
This acquisition by Telecom is a fact, and despite what is said is a fact there is no turning back. The acquisition price has been auction.
This means that the State will have on the other side to resolve or not several issues that have to do with a group that will concentrate media, networks, employees, purchasing power of all kinds of supplies such as content, bandwidth, etc., and that without a doubt it will have a dominant position in several locations which can also affect customers also to the competition. And not less is to solve the spectrum concentration.
As every process will be painful because it will leave many employees without work, corporate structures are reduced, the same will happen with many suppliers and also must lower their prices in the face of customer negotiation power.
The processes of divestment of the past did not leave us good experiences, of the opinion of defense of the competence of the fusion passed to the president of the agency at that time abstained by conflict of interest.
The regulatory entities do not have it easy, but hopefully they can have the right people, and that the impacts on the investments that they do not decay can be minimized, the labor sources can be compensated and that customers can have good services and competitive prices, the value and quality of communications is key to the competitiveness of a country and Elon Musk only can not achieve it.
Returning on alerts to this process are market and spectrum concentration.
One of the main risks of this acquisition is the reduction of effective competition in the sector. With fewer companies operating in the market, Telecom could exercise greater control over prices and services conditions, leaving consumers with fewer options.
This concentration affects all services: mobile and fixed telephony, internet, television and buy -width wholesale and bandwidth.
Telecom, by integrating Telefónica, becomes the dominant actor in:
- Network infrastructure: With an enlarged mobile and fixed coverage, the company could control the access and prices of connectivity.
- Internet and TV services: The acquisition allows Telecom to position itself as the main internet and satellite television provider
- Content wholesaler: by adding the commercial agreements of Telefónica, Telecom could impose conditions on other operators in the acquisition of audiovisual content and licenses for TV and streaming.
- Wholesale bandwidth: Telecom would be the main access provider to trunk networks, which could limit access to smaller ISPs and generate entry barriers to new competitors.
- To this is added the concentration of the radio spectrum. With this purchase, Telecom adds not only the customer base and telephone infrastructure, but also its telecommunications spectrum, which gives it a significant domain over the bands used for mobile telephony and data transmission.
According to Argentine regulation, there is a maximum spectrum limit that a single company can possess. With the incorporation of Telefónica, Telecom would exceed this limit, which could lead to regulatory measures such as:
- The return of the spectrum to the authorities for their redistribution among other operators.
- Restrictions in future spectrum tenders to avoid greater concentration.
- Specific conditions in the fusion, such as the transfer of infrastructure to third parties or the opening of networks.
- Or the change of regulation, since the above is very cumbersome to implement and control.
Regulatory entities have already expressed concern about the impact of this fusion and could impose conditions or restrictions to guarantee free competition and avoid anti -competitive practices. Detailed evaluations are expected in the coming months to determine the impact of this operation on the market and in equity on access to the available frequencies. In Colombia this process has been easy for more than 1 year.
It will also be necessary to know how the operations of wholesale areas of Telefónica look like those that have to do with satellite services or submarine cables, the Spanish operator is an important player in international connectivity through submarine cables.
Let’s be attentive to what happens in the coming months and reading serious analysts in the sector.
President of the Technology, Innovation and Digital Transformation Commission of the Argentine Center for Engineers.
Source: Ambito
David William is a talented author who has made a name for himself in the world of writing. He is a professional author who writes on a wide range of topics, from general interest to opinion news. David is currently working as a writer at 24 hours worlds where he brings his unique perspective and in-depth research to his articles, making them both informative and engaging.
