Telecom Argentina, the owner of Flow and Personal brands, made an official announcement on February 24 according to which an agreement had been reached to acquire Movistar Argentina, a subsidiary of another important telecommunications company: Telefónica. The transaction is subject to the approval of Argentina’s regulatory agencies. Both companies offer Internet and Pay TV services, as well as fixed and mobile phone services in Argentina.
In the early hours of February 24, Argentine newspaper La Nación published information about the transaction, after which the news was reported by several local and international media outlets. It was near the end of the day that Telecom itself confirmed the transaction by means of an official communication. The news was also announced by Telefónica in a press release.
Prior to the official announcement made by the companies, Argentina president Javier Milei issued a communication stating the following: “In view of the potential acquisition of Grupo Telefónica by Telecom, the intervention of Argentina’s Communications Agency (Enacom) and Competition Defense Commission (CNDC) will be required to determine whether the transaction is tantamount to the creation of a monopoly. The acquisition would result in roughly 70% of telecommunictions services being in the hands of a single economic group, which would create a monopoly thanks to benefits given by governments to the company for several decades. If that is the case, the government will take such measures as may be necessary to prevent the formation of a monopoly.”
According to information provided by the companies involved, the amount of the transaction is USD 1.245 billion. The deal was reached and the agreement was entered into on February 24. Telecom hired BBVA for the provision of advisory services and got initial financing from BBVA, Deutsche Bank, Santander and ICBC in an aggregate amount of USD 1.17 billion.
“In this way, Telecom will go on developing Argentina’s digital infrastructure and will increase fixed and mobile broadband coverage. At the same time, the deployment of fiber optics and 5G will accelerate. As a result, Argentina’s digital infrastructure will reach international level and quality, which will promote the development of important economic sectors,” Telecom’s spokespeople asserted. “The transaction occurs in a context of growing consolidation of the telecommunications industry throughout the world, which involves significant transformations including the emergence of new transnational actors and technologies, the demand for capability and the intensive use of networks by important global platforms, as well as the need to articulate infrastructure and service synergies with the aim of meeting the demands of exponentially increasing traffic,” they added.
Telecom CEO Roberto Nobile noted: “This trasaction further proves that Telecom renews its commitment to investing in Argentina in the context of current macroeconomic circumstances, which deliver certainty and stability for competitive private investment.”
In addition, Telefónica spokespeople said that the sale of the company’s subsidiary in Argentina “is part of the group’s strategy towards reducing its exposure in Latin America and operating sustainably in order to enhance shareholder value.”
