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Summary

On the last day of 2016, Argentina’s president, Mauricio Macri, released a presidential decree reforming telecoms laws, with the aim of encouraging investment, fostering competition, and bringing new convergent offers to the market. Although most market players share these objectives, the devil is in the details, and none of the players is fully satisfied with the new reform. Most of the new regulations are going to be defined by the Ministry of Communications or converged regulator ENACOM, and there are several concerns about the criteria that will be adopted, particularly regarding spectrum management and interconnection.

Competitive landscape

A year after Argentina’s new government was elected, it issued the Presidential Decree for a Convergent Regulatory Framework. Although the business climate has improved, the economic situation is not improving as fast as expected, and telecoms investments haven’t grown, particularly in fixed broadband. The new regulation allows major telecoms operators to offer triple-play services including cable pay TV (DTH is still forbidden) in the main cities – the Buenos Aires metropolitan area, Cordoba, and Rosario – from January 2018, with the delay intended to protect smaller local operators from a sudden influx of competition. Authorization for other areas will be defined by ENACOM, which is a source of uncertainty for investors, though telcos are likely to adopt an OTT TV approach rather than traditional pay TV.

In addition, a 15-year regulatory holiday has been approved for fiber NGN deployments. Some spectrum, mainly the frequencies that Nextel (Clarin Group) acquired in the 2.6GHz and 900MHz bands, would be authorized to be refarmed for LTE through a procedure defined by ENACOM, including financial compensation and obligations such as coverage and shared use. Telefonica is considering whether to make an international legal appeal, since it recently paid a large sum for LTE spectrum.

A new spectrum auction is set to be announced in six months, but it faces controversies: The 700MHz band spectrum that MNOs acquired in 2015 has yet to be freed up by the government, and the operators have said that they are not willing to pay for new spectrum at this stage. The government has announced the creation of a Public Protection and Disaster Relief network but has released no major details, leaving operators to wonder about the fate of the 20MHz left in the valuable 700MHz band.

Several interconnection guidelines were included in the decree, applying average regional interconnection charges until a new interconnection regime is adopted. To facilitate the entry of a fourth mobile player, the reforms include obligatory national roaming (commercially agreed) and asymmetrical mobile termination rates for three years, with a possible extension for another 18 months. Although this is an advantage for Clarin Group’s entry into the mobile market and although the final conditions haven’t been set yet, the business case looks challenging at this stage of market maturity, especially considering the lack of international precedent for a successful entry of a fourth player.

Ovum believes that the real battlefield will be a possible alliance or merger between Clarin Cablevision and Telecom Argentina, since Fintech Advisory is one of the main shareholders of both companies. Because of the potential impact on market concentration, such a move would require a regulatory approval process. 

Appendix

Further reading

Argentina TV Update, ME0003-000638 (February 2016)

Argentina Update, TE0001-001034 (June 2016)

Argentina moves toward a convergent regulatory framework, TE0001-001024 (March 2016)

Argentina (Country Regulation Overview),TE0007-001047 (October 2016)

Author

Sonia Agnese, Senior Analyst, Latin America

sonia.agnese@ovum.com

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