Telefónica, the major Spanish telecommunications company, has officially completed the sale of its Argentine subsidiary to Telecom Argentina for over 1.2 billion dollars. This significant transaction, valued at approximately 1,245 million dollars (around 1,190 million euros), marks Telefónica's first major corporate operation under the leadership of Marc Murtra, who took the presidency of the company earlier this year.
The announcement came late Monday, detailing how TLH Holdco, wholly owned by Telefónica, sold all its shares representing 99.999625% of Telefónica Móviles Argentina's capital to Telecom Argentina. The deal is part of Telefónica's broader strategy to reduce its exposure to Latin America, as noted by the company’s declaration to the Comisión Nacional del Mercado de Valores (CNMV).
According to Telefónica, the decision to divest from Argentina aligns with its asset management strategy aimed at focusing on more profitable and stable markets. “This operation is part of Telefónica's asset management strategy and aligns with its objective to gradually reduce exposure to Latin America,” the company stated.
Telecom Argentina, controlled majorly by the media conglomerate Clarín and the investor David Martínez, expressed ambitions to leverage this acquisition to advance the digital infrastructure of the country. “This transaction demonstrates our commitment to continue investing in Argentina under current macroeconomic conditions, which provide certainty and stability for private and competitive investments,” said Telecom Argentina's CEO Roberto Nobile.
The sale also aligns with the increasing trend of consolidation within the telecommunications industry globally, which has faced transformative changes amid rapid technological advancements and rising demand for capacity. “With this operation, we will develop the infrastructure to keep our services competitive internationally, enhancing fixed and mobile broadband and accelerating the deployment of fiber optics and 5G technology,” Telecom Argentina highlighted.
The transaction is significant not only for the sale price but also because it may consolidate around 70% of telecommunications services within Telecom Argentina, raising potential monopolistic concerns. The Argentine government has already indicated it will conduct thorough evaluations through the Ente Nacional de Comunicaciones (ENACOM) and the Comisión Nacional de Defensa de la Competencia (CNCD) to determine the deal's impact on competition.
Telefónica has been operating in Argentina since 1990, and this divestment follows months of speculation about its willingness to shed non-core assets as part of its new strategic direction. The company also made headlines recently after its subsidiary in Peru sought creditor protection due to looming financial challenges.
Telefónica achieved this timely sale within just weeks after Murtra took office, showcasing his swift action to align with the company’s strategic resolution aimed at halving its significant debt load, which stood at nearly 29 billion euros as of the third quarter.
The deal for the Argentine subsidiary follows on the heels of successful transactions from earlier Latin American operations under the previous president, José María Álvarez-Pallete. The strategy included creating the Hispam division to streamline management of Latin American assets, excluding Brazil, which is still considered strategic.
Among the bidders for Telefónica’s Argentine subsidiary were various other players, including local investor groups. Interestingly, this growing interest coincided with the recent political changes under President Javier Milei, which have spurred optimism among investors about the Argentine market.
Despite securing offers primarily from domestic constituents, Telecom Argentina’s swift action and substantial investment plans highlight both companies' dedication to enhancing telecommunications infrastructure as fierce competition looms.
The completion of this sale reflects Telefónica's continuing efforts to adapt to the volatilities of Latin American markets, where issues like currency fluctuations have historically cost the company significant financial losses. By divesting from Argentina now, Telefónica may escape some of the economic turbulence plaguing the region.
Looking forward, Telefónica plans to use the capital garnered from this sale and potentially others to restructure its portfolio and fortify its presence mainly within European markets, including Spain, Germany, and strategic segments of Brazil, confirming its commitment to reignite growth after challenging years.