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October 22, 2014
Thursday, September 6, 2012

State gets role in mobile phone sector

Planning Minister Julio De Vido speaks yesterday.
Company will operate 25 percent of 3G network spectrum

The national government said yesterday that a state company would start operating mobile phone frequencies after it cancelled a tender for part of the 3G spectrum on the grounds that it risked monopolization.

Planning Minister Julio De Vido said five companies submitted bids after the tender was launched in May 2011, but that only one of them — Claro, a unit of Mexican tycoon Carlos Slim’s telecom giant América Móvil — met the necessary financial requirements.

The contract to operate 25 percent of the country’s 3G airwaves was not awarded to Claro, however, because that would have created a virtual monopoly, De Vido said.

The frequencies will be operated instead by the state telecommunications company ARSAT, which could exploit them in partnership with small- and medium-sized companies or major operators.

“We’re tired, we’re fed up of monopolies and we don’t want to do anything that causes a situation in which companies, which maybe today don’t have a monopoly as service providers, end up becoming (monopolies),” the minister told a news conference.

President Cristina Fernández de Kirchner has steadily increased the state’s role in Latin America’s third-largest economy in recent years, nationalizing leading energy company YPF, the main airline Aerolíneas Argentinas, and billions of dollars in private pension funds since 2008.

The government also is studying other ways of reducing monopoly control in the telecommunications business, De Vido said, citing the dominant positions of Telefónica and Telecom as a setback for consumers.

“This is not a state takeover,” De Vido insisted, but an effort to bring consumer prices down through more competition. “Argentines are sick and tired of monopolies,” he said.

De Vido said the move also should give consumers more choices as 4G devices roll out.

Shares in local telecommunications companies fell after the announcement, although the benchmark MerVal share index held broadly steady. Telecom Argentina, which was among the five bidders, was down 3.8 percent at 13.90 pesos per share in mid-afternoon trade in Buenos Aires.

“(Stock) investors aren’t happy about the incursion into the mobile phone business,” said Dionisio Corneille, director at the Corneille brokerage.

The companies that bid for the 3G contract were NII Holdings’ Nextel Communications Argentina, Telecom Argentina — controlled indirectly by Telecom Italia — Claro and two local groups.

Argentina’s mobile phone market is split up between Nextel, Telecom, Claro and Telefónica’s Movistar.

The public bidding had been called for May 9, 2011. “It’s a national government policy to provide the media aimed at improving the telecommunication service, in order to benefit users,” the CFK administration said. Companies should promote “investment and job creation,” it said.

According to De Vido: “The objectives (of the public call for tenders) could not be met because some companies (that applied) didn’t qualify for bidding.”

De Vido said “the presence of a state-owned company will have an impact in the costs structure” of the communications and radio broadcasting services.

“We are following a similar scheme than the one we conducted with the fiber optic cable, here we are simply adding 24,66 percent more frequencies that weren’t being offered, because the service was in the hands of a company that was overflowed with frequencies,” said De Vido.

Regarding rate modification, the minister said “there is a committee in the energy sector analyzing costs, but surely something will have to be done in the communications sector.”

ARSAT was created through law 26.092 on May 2006, in accordance to a national government satellite policy, later on in March 2007, it acquired satellite company Nahuelsat S.A., taking control of one of its satellites, NAHUEL 1.

ARSAT also aimed to become the “backbone” of fibre optic cable service in Argentina.

In its webpage the company states that its mission is: “to take the strategic role in the implementation of national government policies, in matters of telecommunications, radio broadcasting and Internet.”

MEDIA COUNCIL ESTABLISHED

The new Federal Council of Audiovisual Communication (COFECA) was established yesterday and the approval of representatives and jurisdictions was approved via a decree, the national government said. COFECA is an agency established when the new Media Law was approved in 2009.

COFECA’s role is to aid the government’s media watchdog and to propose media policies.

Herald with AP, DyN, Reuters, Telam

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