Milei wants to intervene in the sale of Telefónica in Argentina, alleging the creation of a monopoly

Buenos AiresThe Argentine government has announced that it will investigate the sale of Telefónica's subsidiary in the country to the telecommunications group Telecom to avoid, it says, the creation of a monopoly. Telecom Argentina SA is one of the two main local telephone companies, the one that operates in the northern half of the country. The other half is dominated by the Spanish company Telefónica, which on Monday announced the sale of its business for 1.245 billion dollars (about 1.19 billion euros) to Telecom. The Spanish multinational's statement specifies that this operation is part of a strategy initiated in 2019 "to gradually reduce exposure to Latin America," where it operates in different countries, including Chile, Peru, Mexico and Colombia.

While the media were confirming the multi-million dollar purchase on Monday afternoon, the Argentine government issued a statement warning that it would investigate the operation through the National Communications Agency (ENACOM) and the National Commission for the Defense of Competition (CNDC), since the acquisition of the company was "economically significant, which would generate a monopoly formed thanks to decades of state benefits that the aforementioned company [Telecom] has received." It clarified that, in that case, the Argentine state would take "all pertinent measures to avoid it."

The government's position has generated discussion in public opinion for different reasons. Firstly, because Milei would be intervening in a market operation with state instruments, which for many would be a contradiction with his ultra-liberal ideology. In addition, the expert in politics and technology Agustín Espada tells ARA that, technically, "we cannot speak of a monopoly but of a company with dominant power," since there are other service providers communication companies in Argentina, including America Movil, owned by Mexican Carlos Slim. "What the government should analyze, in this case, is whether Telecom's dominance nullifies the ability of the rest to compete," he said.

Secondly, Milei's intention to keep an eye on this operation has not been free of partisan suspicions. The fact is that 40% of Telecom's shares belong to the Clarín media group, an Argentine media conglomerate that includes the newspaper of the same name - the most widely read in the country - the leading network Radio Mitre and the television channel Todo Noticias (TN). "Symbolically, the Clarín group represents the common sense of the Argentine middle class," says Espada, and although Milei has not openly confronted the group, he has done so against journalists who belong to it and who have criticized him. "The government's relationship with Clarín is not bad, but it is tense," says Espada, who believes that the recent television episode that has outraged a large part of public opinion has been nothing more than a show of force by the media group against the government in the context of the negotiation for Telefónica. This is the leak of an off-recording of the interview that journalist Jonatan Viale, from TN, recently made to the president, where one of Milei's advisors is seen stopping the conversation to avoid a compromising question about The $Libra cryptocurrency scandalEspada points out that, in those days, Telefónica had other interested buyers, businessmen close to the government, such as Carlos Slim himself.

Possible divestments

Sources from Enacom have confirmed to ARA that the organisation "is already working to carry out the corresponding evaluations" but that the final word will be given by the National Commission for the Defence of Competition (CNDC), which has not wanted to make any statements. According to Espada, as the operation is already closed, what the government could do if it intervenes is order Telecom to sell a certain number of shares in certain companies, where, "as is often the case in Argentina, governments tend to seat friendly businessmen," he says. As for Telefónica's exit from the country, the expert does not consider that it can be classified as a process of foreign divestment, since the company has been explicitly stating for years its intention to leave Latin America while it approaches markets in the Arab world, as it recently did with the operator Saudi Telecom Company.