Telefonica, Telecom Italia sign anti-trust deal in Argentina

Buenos Aires, Agency
Spain's Telefonica and Telecom Italia have signed a deal to avoid monopoly practices in Argentina, where their respective subsidiaries are the two biggest telecommunications operators.

The Argentina government said in a statement that the two European groups "will adopt a series of measures (that ensure) there will be no control, substantial influence nor exchange of information" between Telefonica de Argentina and Telecom Argentina.

"The agreement is very important because both companies are conforming to Argentine anti-trust laws with transparent agreements," President Cristina Fernandez said during a public appearance.

She added that Telecom Italia has agreed to withdraw a complaint against the Argentine government that it had brought before the World Bank's International Center for Settlement of Investment Disputes.

Argentina's National Commission for the Defense of Competition launched an investigation in 2007 to determine whether Telefonica's acquisition that year of an indirect stake in Telecom Italia would create a monopoly in the local market.

Argentina's Werthein Group - Telecom Italia's partner in Sofora Telecomunicaciones SA, the holding company that controls Telecom Argentina - also objected to the Spanish company's indirect stake in TI for months.

But the two partners reached a deal in August in Milan that put an end to all pending disputes between them. As a result of that agreement, the Werthein Group also agreed to cede 8 percent of its stake in Sofora to Telecom Italia, giving the latter a controlling share.

Following Wednesday's deal between Telecom Italia and Telefonica, Argentina regulatory authorities agreed to put a halt to their anti-trust investigation.

Telecom Argentina provides service to more than 4 million fixed-line subscribers in Buenos Aires and north-central Argentina, 17 million wireless subscribers in Argentina and Paraguay and 1.27 million Internet customers.

The company posted 865 million pesos ($217.3 million) in net profit in the first half of 2010, up 23 percent from the same period of last year.