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Argentina cancels wireless auction; gives spectrum to state-owned satellite operator

The Argentinian government has canceled its plans to auction wireless spectrum and instead allocated 25% of 3G spectrum to the state-owned satellite operator, Arsat. To justify the move, the government said it would prevent a monopoly. The announcement was made on Wednesday, startling the market.

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Analysts questioned how Arsat would avoid import restrictions to build its mobile network (if receiving the same treatment of Claro, Movistar and Personal); how the government would come up with the billions of dollars Arsat will need to build its mobile network; and if the telecommunications sector would be the next to have an increased government presence, following the recent nationalization of the leading energy company, YPF.

Five telecom operators had submitted bids after the tender was launched in May 2011, but according to the government, only América Móvil’s Claro met the requirements and had the necessary resources to manage part of the spectrum. However, letting Claro win would have led to more concentration, according to the government.

Arsat is expected to move into the mobile telecommunications market through partnerships with small- and medium-sized companies or major operators.

“I don’t expect Arsat to be able to become an important player in the local mobile market,” said Jose Otero, president of Signals Telecom Group. “The Argentinian government’s decision is a setback for Movistar, Claro and Personal’s plans to launch LTE. However, Nextel is left in a compromised position without any viable way to migrate away from its iDEN network. The operator even looks like a potential acquisition target for the Argentinian government if it wants Arsat to at least have an established mobile subscriber base prior to launching its own mobile services.”


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