YOU ARE AT:Archived ArticlesARGENTINA TAKES PCS TENDER TO U.S. IN HOPES OF RAISING MONEY

ARGENTINA TAKES PCS TENDER TO U.S. IN HOPES OF RAISING MONEY

Roberto Catalan, president of Argentina’s communications commission, known as CNC (Comision Nacional de Comunicaciones), recently completed a United States road show designed to attract investor interest for a personal communications services tender.

The CNC is looking for foreign companies to operate two 50-megahertz bands in a 100-kilometer region consisting of mainly Buenos Aires but including surrounding areas as far north as Zarate and as far south as La Plata. The license area has a population of 12.6 million people.

Catalan visited New York and Washington D.C., to present the basics of the tender. Interested companies must pay $35,000 for the tender document, which outlines the specifics of the PCS project, including which technology will be deployed. The overall idea was to increase investor interest in Argentina. The country hopes to raise some $300 million from the deal.

The government seeks foreign operators without holdings in Argentina. The first licensee will decide the nationwide standard.

Sale of the tender document will continue until mid-July, after which the CNC will review bids in two stages. The first stage of criteria reviews the bidders background: financial status, subscriber numbers, etc. The second stage reviews the technical specifications, such as rollout schedules, coverage and other technical parameters.

According to J.J. Gullish, an analyst for the Bethesda, Md.-based International Technology Consultants, the original tender proposal contained several local content requirements listing a certain percentage of equipment to come from Argentinean companies. But some of that required equipment, such as network equipment, was not available in Argentina. The government has since modified the local content requirement to include only items readily available in Argentina, such as software, towers and labor.

According to Gullish, several companies have bought the tender package, including the Swedish-based Telia Mobitel AB, AT&T Wireless Services Inc. and Comcast Cellular Communications Inc.

According to ITC, Argentina is the third-largest telecom market in Latin America, behind Brazil and Mexico, respectively, in cellular subscribers. In Buenos Aires, cellular penetration reached 3.2 percent in February, a figure which could double during the next several years once two PCS operators are licensed.

A report titled “PCS Market Environment: Argentina,” conducted by ITC, said Argentina is a “major market for telecommunications, offering a variety of business opportunities for investors, service providers and manufacturers … With the combination of positive economic performance and regulatory changes, PCS will become the focal point for the Argentine telecommunications sector in 1997.”

Total telecom investment in Argentina grew from $4 million in 1993 to $6 million in 1995. According to ITC’s report, Argentina’s Fundacion Invertir estimates the telecom sector will be the largest beneficiary of U.S. foreign direct investment between 1994 and 2000, with predictions for the time period being $7.5 billion. This figure represents about 30 percent of Argentina’s total FDI.

However, the report also listed interconnection fees, regulatory reform and the economic viability of the wireless operators in Buenos Aires as concerns. Cellular operators in Argentina pay extremely high interconnection fees and the government has been slow to induce interconnection agreement renegotiations.

Catalan has said the government is considering deregulating basic telecom services before 2000. All wireless operators at that time must compete with newcomers to the market, including CATV operators that already have large customer bases.

Argentina’s two main telecom operators are Telecom Argentina and Telefonica de Argentina. These two entities are currently expanding their networks and adding services to include paging, caller ID, voice mail and data communications.

The CNC, the organization that replaced the Comision Nacional de Telecomunication in December, is a part of the Ministry of Communications and is responsible for assisting the ministry of communications with technical information, managing the postal service, developing norms for the communications sector and allocating spectrum and applying sanctions for non-compliance.

ABOUT AUTHOR