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After 10 months of analysis leading to a resolution of more than 200 pages, the National Commission for the Defense of Competition (CNDC) on Friday approved the merger of Telecom and Cablevisión. It is the largest operation of its kind in the history of Argentina, which gives birth to the third largest company in the country by billing level, after Free Mercado and YPF
Megafusión, announced exactly one year ago, consists of technically in the absorption of Cablevisión (Clarín group), by Telecom (Fintech group). The new company is now called Telecom, although Cablevisión is the parent company, and its main business will be providing quadruple play services: fixed and mobile telephony, internet and television.
In announcing the resolution, the CNDC said in a statement that it "imposes obligations and makes recommendations at four levels: disinvestment, commercial offers, network and spectrum availability."
In this way, Telecom-Cablevisión must sell its fixed broadband service under the Arnet brand in 28 locations in the provinces of Buenos Aires, Córdoba, Santa Fe and Misiones. The buyer is the company Valentini, a family-owned Internet SME based in Coronel Pringles and operating in several localities in Patagonia under the Universo.net brand.
Although it did not transcend the amount of the transaction (already approved by the CNDC), the business acquired by Valentini has 144,000 customers and an annual business turnover 500 million. In return, Telecom retains operations under the brand Fibertel, which has a more modern infrastructure and offers greater connection speed.
Competition Issues
In the recitals to this resolution, it is explained that "the merger would have created competition problems in places where Cablevisión and Telecom were the only companies to deploy a fixed network" and that " for this reason, the merged company must dispose of approximately 144,000 customers (representing 9% of the total Arnet portfolio) ". The certification process for the divested customer portfolio was carried out by consulting firm Deloitte
. On the other hand, Telecom has to provide wholesale Internet services so that other competing operators can provide this service at the same time. residential level, at a "market" price. "In this way, the entry barrier which represented the obligation to carry out a network installation itself in order to market the service is eliminated.
In addition, the CNDC requires that Telecom reimburse up to 39, at 80 MHz spectrum, "to allow balanced competition between actors." Spectrum returned may be auctioned by the state.
Although the new mega-enterprise can provide a quadruple game, it will be able to offer packaged services only in early or mid-2019, depending on the country's areas.It does so to "avoid the benefits of being the first operator to offer the service and give its competitors more time to invest or partner to provide convergent services, "said the CNDC in its release.
According to the original agreement, Cablevisión Holding, majority shareholder of Cablevisión, and Fintech Media, its minority shareholder, "receives would be a direct and indirect total shareholding in Telecom Argentina (whose main indirect shareholder is Fintech Telecom LLC) equal to 55% of its capital, taking into account the expected increase in share capital, while "the current shareholders of Telecom Argentina will retain the remaining 45% of the share capital following the merger. "
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