BUENOS AIRES, Sept 23 (Reuters) - Even though new rules have not yet been implemented, telecom companies in Argentina are preparing for a more competitive market as the government expects reforms to attract $20 billion in investments over four years.
Telecom Argentina and Telefonica de Argentina have announced investments in recent months, while Argentina’s largest media conglomerate, Grupo Clarin, is spinning off subsidiary Cablevision SA, saying in August it could better face competition as a stand-alone unit.
Communications Minister Oscar Aguad told Reuters companies, including Motorola and AT&T Inc, have expressed interest in investing in Argentina, which would mean better services and lower costs for consumers.
“As long as we are able to dictate a norm with clear rules, I think the figure of $5 billion a year is possible,” Aguad told Reuters, adding that the investment level should continue for four years. The new rules take effect in 2018.
AT&T declined to comment while Motorola Mobility said Argentina is an important market and it continues to look for opportunities here.
The telecom reform is one of many changes on President Mauricio Macri’s agenda as he tries to drive investment into an economy that was highly regulated, cut off from capital markets and therefore largely ignored by investors for a decade.
Shortly after taking office, Macri signed a decree to allow phone companies to offer paid television services, an area that has long been dominated by Cablevisión, Groupo Clarin’s internet, cable TV and data transmission subsidiary.
In addition to allowing telephone companies to enter the cable TV market, Macri’s government plans to sponsor a new communications law next year that would encourage technological development and competition, according to Silvana Giudici, head of Argentina’s telecom regulator.
Telecom Argentina, acquired in March by investment group Fintech, said in July it would invest some $2.6 billion through 2018, while a representative for Telefonica’s local branch said it already invested $330 million in the first six months of this year. Fintech is owned by David Martinez, a Mexican financier.
Analysts said mobile brand Claro, owned by Mexican billionaire Carlos Slim, could also benefit from the changes.
“The audiovisual service will allow the company to improve its average revenue per user,” said a Telefonica executive in Argentina who asked not to be identified.
The executive said the company is seeking more clarity on the reforms before investing in a fiber optic network that would deliver media content to households, however.
Telecom and Telefonica both remain at a disadvantage to Cablevision and other cable operators, which can offer internet and television through the same fiber optic cable.
Telephone companies would need to improve their network cables in order to deliver television.
In addition to Cablevision, telephone companies have to compete with satellite distributor DirecTV, Supercanal and some 1,000 small cable channels.
“It is very expensive to build a network, and to do it the companies need to know they will recover this cost,” said Enrique Carrier, a specialist in communications technology with Carrier Asociados.
One result of the reforms could be more mergers and acquisitions. Local media and analysts have speculated that once the spin-off of Cablevision from Clarin is complete, it could merge with Telecom and offer a service known as “quadruple play” fixed-line and mobile phones, internet and television.
Spain’s Telefonica SA, which owns Telefonica Argentina, has expressed interest in buying pay TV assets in Latin America, sources have told Reuters.
Telecom and Clarin both denied a merger was in the works.
Staying out of the cable market is likely not an option for phone companies wishing to remain competitive.
“If they do not include the television package, businesses could be left behind,” said Martín Becerra, a telecommunications specialist at the University of Buenos Aires. (Writing by Caroline Stauffer; Editing by Dan Grebler)