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Summary

Argentina’s pay-TV and mobile operators have been contending with a new economic and political landscape since December 2015. New regulations were approved to end a long legal dispute with Clarin Group (Cablevision) and establish a more market-oriented business climate. Changes were done quickly and, to some extent, haphazardly. Clarin Group benefited the most from a presidential decree and the first decisions from the newly converged regulator ENACOM. The new regulatory framework reveals several inequities between players, so further changes may be necessary soon to create a level playing field.

Cablevision enters the mobile business, but major operators can’t offer triple-play services

A new economic and political cycle started in Argentina at the end of 2015 when newly elected President Mauricio Macri took office after 12 years of the populist Kirchner administration. Very sudden initial decisions were taken to boost growth in the telecom sector and to generate a positive business climate. A Ministry of Communications was formed (before there was only a Secretary) and a converged regulator (ENACOM) was created, dissolving AFTIC (which came into being only seven months before) and AFSCA (the highly politicized media watchdog). Cable television was reclassified as an ICT service (like telecommunications) instead of a media service, with a lighter regulatory regime. A new convergent law is slated to be approved by the congress in two years, so a commission was formed to unify the media law and the digital telecom law, but in Ovum’s opinion this will be difficult to achieve considering the government lacks a majority in the parliament.

A presidential decree was approved to end legal conflicts with the Clarin Group that threatened to split the country’s main media group into six different companies, and the group’s acquisition of Nextel (which has a 3% market share) was approved, allowing the Argentine broadband leader to enter into the mobile business. Fintech Advisory, which owns 40% of Clarin Cablevision, was approved to become a majority stakeholder of Telecom Argentina by acquiring a stake from Telecom Italia, which is exiting the Argentine market.

David Martinez, founder and managing partner of Fintech Advisory, made public declarations, stating that “for the moment” Cablevision and Telecom Argentina would remain competitors, so a merger of the two companies is feasible. This would change the market configuration to include two regional operators (America Movil and Telefonica) and a strong local player as leader in the pay-TV market (Cablevision/Telecom Argentina). The presidential decree granted two years (extendable to three) of exclusivity where mobile or fixed incumbent operators are not allowed to offer pay-TV services. DTH, the fastest way fixed operators have to offer pay TV, is currently forbidden by the regulatory regime, because satellite television is considered a standalone service and can’t be combined with other services.

DirecTV (acquired by AT&T), with a 37% market share, is the only DTH operator, and although it offers some broadband services in certain areas (WiMAX and fiber) as well as AT&T enterprise business services, according to the new regulation this is not strictly allowed. This inequity should be an enabler to update the regulation regime towards a fully converged framework, where all operators can offer all services with any technology. In Ovum’s opinion, the needed investments in the fixed networks won’t be very significant until all operators can offer pay-TV services.

Appendix

Further reading

Argentina TV Update, ME0003-000638 (February 2016)

Argentina Update, TE0001-001006 (January 2016)

Author

Sonia Agnese, Senior Analyst, Latin America

sonia.agnese@ovum.com

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