January 24, 2018

Sources tell Reuters move would happen to ensure limits are not breached

Friday, July 14, 2017

Merged firm ‘would have to return airwaves’

Telecom Argentina SA and cable TV provider Cablevisión SA will have to return broadcast airwaves spectrum if a proposed merger between the two companies is to be approved, a source with the country’s Enacom communications regulator has told the Reuters news agency.

Telecom and Cablevisión recently said they reached a merger agreement enabling them to offer so-called “quadruple play” services combining TV, Internet and fixed and mobile phone lines into a single package and realising a key goal of President Mauricio Macri’s telecom sector reforms.

But the new company would use a bigger portion of available airwaves than any single telecoms provider is allowed, exceeding the maximum allowed frequency limit of 140 megahertz, said the source, asking not to be identified.

Enacom and the National Commission for the Defence of Competition, or CNDC, both have to approve the merger, which would create a company with a market cap of about US$11 billion, according to brokerage Itau BBA.

“Definitely, at one glance, there is an excess of the 140 megahertz limit that the combined company would have. This is the merger’s first problem,” the source said.

Radio airwaves have become an increasingly valuable commodity for wireless telecoms operators which need them to satisfy demand for video and music streaming among other data-heavy services.

The Communications Ministry plans to increase the maximum allowed megahertz limit to between 160 and 180, but that would still be too low for the estimated 220 megahertz that the combined company would have, the source said.

The excess frequency would have to be returned to the state, the source added. That step would be part of a broader regulatory review expected to take at least six months, the source said.

The merger of the two separate companies in which Mexican billionaire David Martínez holds stakes will require shareholder as well as regulatory approval.

Shortly after taking office in December, 2015, Macri signed a decree to allow phone companies to offer pay television services, an area that had long been dominated by Cablevisión, an Internet, cable TV and data transmission company that was formally previously part of the Clarín Group.


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