Telecom Argentina (NYSE:TEO) and in-country rival Cablevisión have announced a coming merger that will allow the two to get into quadruple-play bundles.
The move would combine two leading Internet service providers and come just ahead of the country's plan to open its market up and allow for quad-play offerings (fixed-line and mobile talk along with broadband and TV). But with media regulation a hot topic there, the merger is sure to be part of an upcoming congressional campaign.
The boards have approved the deal but regulators and shareholders will need to sign off.
If successful, giving the two a 55% market share in broadband will apply new pressure to America Movil's (NYSE:AMX) Claro unit as well as the local unit of Telefonica (NYSE:TEF).
MSCI last night surprised by not upgrading Argentina (NYSEARCA:ARGT) to emerging market status - meaning its stocks will not be able to be added to emerging markets indices.
Probably the most popular of Argentine ADRs is YPF, and it's down 10% premarket. BBVA Banco Frances (NYSE:BFR) fell 7.6% after hours. Cresud S.A. (NASDAQ:CRESY) dropped 6.5%. Grupo Financciero (NASDAQ:GGAL) -5.8%; Pampa Energia (NYSE:PAM) -7%.
Other ADRs of note: Banco Macro (NYSE:BMA), Grupo Supervielle (NYSE:SUPV), Petrobas Argentina (NYSE:PZE), Telecom Argentina (NYSE:TEO), Irsa Inversiones y Representaciones (NYSE:IRS), Tenaris (NYSE:TS), Ternium (NYSE:TX), Transportadora de Gas del Sur (NYSE:TGS)
A strategy of openness pledged by recently elected president Mauricio Macri is causing investment rethinking across industries. AT&T (NYSE:T) and Motorola Mobility have expressed interest in investing there, Communications Minister Oscar Aguad told Reuters.
"As long as we are able to dictate a norm with clear rules, I think the figure of $5 billion a year is possible," Aguad says of the regulations set to take effect in 2018.
In local firms, Telecom Argentina (TEO -0.5%) has said it plans to invest $2.6B through 2018, and Telefonica Argentina (TEF -0.5%) has invested $330M in the first six months of this year. Those firms run at a disadvantage in the TV market to Groupo Clarin's Cablevisión, which offers Internet and TV via fiber, and its cable peers (and also compete with satellite distributors like DirecTV and Supercanal).
With Vivendi (OTCPK:VIVHY -0.4%) throwing its weight around in a new strategy -- buying up shares of game makers Ubisoft and Gameloft, and of Italian communications incumbent Telecom Italia (TI +2.8%) -- the heat is on TI chief Marco Patuano to get on board the strategy that Vivendi tycoon Vincent Bollore is pursuing.
Shares of TI are up 10.5% since Wednesday's strategy meetings between Patuano and Vivendi execs, among speculation that change is coming whether Patuano continues to lead or not.
A 26-year veteran of the company, Patuano has increased spending on network infrastructure but has had to navigate a tricky mix of shareholders and government. Italy considers the company of strategic interest to the state, potentially complicating a move in from a French billionaire.
Tensions were present from the time Vivendi first took its stake, and they may be intensifying as Vivendi's stake grows. Patuano struck the deal to sell off TI's control of Telecom Argentina (TEO +0.6%) and spun off its cell towers in a series of moves to address debt, but "Vivendi wants to sell Brazil" -- TIM Participaçoes (TSU +4.8%), the company's Brazilian unit -- "and Patuano does not" since he sees it as strategic, a source tells Reuters.
Vivendi has built its stake to 23.8%, but has just four of 17 board members at present.
The slow-motion battle to acquire Telecom Argentina (TEO -0.6%) has a new wrinkle as Argentine businessman Carlos Newbery says he's ready to bid 10% more than an offer by Mexico's David Martinez.
Telecom Italia (NYSE:TI), the owner of the Argentine telecom, agreed to sell it to Martinez's Fintech Advisory for $960M in 2013 and the deal is finally set to be approved by Argentine regulators who had opposed Martinez as unqualified to run the telecom.
But Newbery tells Bloomberg: "The valuation and potential of the company is higher than what has been offered and we are ready to improve it up to $1.1B."
Telecom Italia says it has a binding agreement requiring it to sell to Fintech until April 2017; meanwhile, Fintech has confidently announced a public tender for the shares of Telecom Argentina that it doesn't own at 46 pesos/share (about $2.98/share).
Argentine telecom regulator Aftic has rejected the bid by Fintech Group -- led by Mexican financier David Martinez -- to buy a controlling stake in Telecom Argentina (TEO -0.2%) from Telecom Italia (TI +3.5%).
Aftic unanimously rejected the Fintech proposal on grounds that it couldn't guarantee normal functioning of a telecommunications company.
Martinez had proposed taking a 68% stake in Sofora Telecomunicaciones, the indirect controller of Telecom Argentina. But regulators noted he had incorporated Fintech in Delaware less than a month before TI accepted his bid.
After coming to agreement with Fintech -- effectively acquiring TI's 22.7% indirect stake in Telecom Argentina for $960M -- TI agreed to give Martinez 30 months to complete the deal, but he continued to fail at the regulatory level.