By Ken Parks
BUENOS AIRES--Shares of Telecom Argentina SA (TEO, TECO2.BA)
fell as much as 6.6% on Thursday after a top Argentine minister
said the phone company's ties with another major telecommunications
provider are a threat to competition.
Telecom Argentina's shares traded in New York fell 5.6% to
$10.19, after hitting an intraday low of $10.08. Its shares in
Buenos Aires were down 5.8% at $13.10 minutes before the end of
trading.
A company spokesman wasn't immediately available for
comment.
"Without a doubt, the fact the government is still looking at a
possible monopoly situation at Telecom and Telefonica" is weighing
on the stock, said Leonardo Bazzi, head of research at brokerage
Puente.
On Wednesday, Argentina's planning minister, Julio De Vido,
hinted that the government will take another look at the complex
shareholder structure that links Spain's Telefonica SA (TEF) to
Telecom Argentina.
"In the case of Telecom and Telefonica, we are going to continue
working to resolve the issue of an installed monopoly [situation].
We are going to be prudent but very firm in making decisions and
setting a time frame to resolve these issues," Mr. De Vido said in
televised comments.
Telefonica's Argentine subsidiary and Telecom Argentina--the
country's largest telecommunications providers--were created from
the privatization of state-run phone company Entel in the
1990s.
Telefonica holds an indirect stake in Telecom Argentina as a
result of a convoluted transaction that saw the Spanish firm obtain
an interest in Telecom Italia SpA (TI, TIT.MI) in 2007.
The Argentine government at one point opposed that transaction
on the grounds that the Telefonica and Telecom Argentina tie-up had
created a virtual monopoly. Argentina's antitrust agency approved
the arrangement in 2010, when Telefonica agreed to give Argentine
minority investors sweeping powers in Telecom Argentina.
Argentine President Cristina Kirchner has significantly expanded
the reach of the state in the economy through heavy regulation and
the nationalization of former state-run companies that were sold to
private investors during the 1990s.
Argentina's largest oil company, YPF SA (YPF, YPFD.BA), airline
Aerolineas Argentinas SA, a water utility, the post office and a
handful of smaller companies have returned to the state fold during
the governments of Mrs. Kirchner and her husband and predecessor,
Nestor Kirchner.
Also weighing on the stock was Mr. De Vido's announcement that
the federal government had decided to cancel the long-delayed
auction of 3G wireless spectrum.
The government called off the auction due to antitrust concerns
and because none of the companies that submitted bids met the
minimum requirements, the minister said.
Instead, the spectrum will be given to state communications firm
Arsat, which Mr. De Vido said will seek partners to offer wireless
services.
That could mean more competition for Argentina's four incumbent
mobile operators--Telecom Argentina and subsidiaries of Mexico's
America Movil SAB de CV (AMX, AMOV, AMX.MX), Telefonica and
U.S.-based NII Holdings Inc. (NIHD)--that submitted bids in the
now-canceled auctions.
Telecom Argentina had long called on the government to make
additional spectrum available so carriers can meet rising demand
for bandwidth-hungry data services.
Argentina boasts one of the highest rates of mobile-phone
ownership in the world, with about 55 million wireless subscribers
in a country of almost 41 million people.
Mobile phone service is a key source of growth for Telefonica de
Argentina and Telecom Argentina, who are saddled with the slow
growth, or no growth, fixed-line businesses they inherited from
Entel.
While fixed-line phone rates have been capped since early 2002,
wireless rates aren't subject to government price controls.
Write to Ken Parks at ken.parks@dowjones.com