- Argentina’s competition body opposes the merger due to concerns about reduced competition.
- Potential solutions may involve recalling mobile spectrum or considering new market entrants.
What happened: CNDC objects to Telefónica’s sale to Telecom Argentina
Argentina’s Comisión Nacional de Defensa de la Competencia (CNDC) has objected to the sale of Telefónica’s operations to Telecom Argentina. This $1.25 billion deal was signed in February. The CNDC argues that the merger will harm competition by reducing the number of mobile players in the market from three to two. This would create a duopoly between Telecom and AMX (Claro). The CNDC’s investigation supports earlier government concerns about the deal’s impact on competition.
The CNDC also raised issues with the concentration of mobile spectrum. The merger would push the combined entity beyond the telecom regulator Enacom’s limit of 140 MHz. In some areas, the entity would nearly double this limit. Telecom Argentina already holds a significant market share. The CNDC is concerned that this merger could worsen market concentration. As a result, the CNDC plans to hold a special hearing to explore actions to reduce the negative effects of the merger.
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Why it’s important
The merger could lead to an imbalance in both the mobile and fixed-line markets. Telecom already controls over 40% of the fixed-line market in some areas. The deal would increase this power even further. With just two major players left, consumers could face higher prices and fewer options. Rural consumers, in particular, often face limited access to quality services.
The government has acted quickly in response to the CNDC’s concerns. It moved to stop Telecom Argentina from integrating Telefónica’s operations. However, Telecom won an appeal against this decision earlier. President Javier Milei has criticised Grupo Clarin, which owns Telecom Argentina. He accused the company of engaging in anticompetitive behaviour. Despite Telecom’s objections, the CNDC is likely to explore solutions. These could include limiting the spectrum held by Telecom or introducing new competitors to the market.
