Argentina suspends Telecom’s purchase of Telefonica unit

Argentina’s presidential office has issued a preventive measure to suspend Telecom’s acquisition of Telefonica’s local unit, claiming the pending merger could lead to excessive market concentration.

Spanish telecoms giant Telefonica (TEF.MC) said in February it was selling its unit in the country to Telecom Argentina (TECO2m.BA) for $1.245 billion as part of a strategy to reduce exposure to Latin America, prompting a pledge from President Javier Milei’s government that it would try to prevent the formation of a monopoly.

Milei’s office said the suspension would remain in place until more analysis was carried out.

The government’s decision follows a recommendation from the National Commission for the Defense of Competition, which raised concerns about the impact of the merger on market fairness.

According to the Argentine government, the transaction would lead to a market concentration of 61% in the mobile telephone sector, 69% in fixed lines and up to 80% in residential internet services in some areas of the country.

Telecom Argentina, which is partially owned by Argentine media conglomerate Clarin Group, has expressed its intent to continue investing in the country’s telecom infrastructure, particularly in expanding 5G and fiber optic networks.

Telecom Argentina said in a statement it had not been formally notified of the preventive measure, but that it would cooperate with authorities and hand over all relevant information needed to assess the transaction.