Telecom Argentina

Infobox Company
company_name = Telecom Argentina
company_
company_type = Public (nyse|TEO, [http://finance.google.com/finance?q=BUE%3ATECO BUE: TECO2] )
foundation = 1990 (privatized from the government of Argentina)
location = Buenos Aires
key_people = Carlos Felices (President)
Amadeo Ramón Vázquez (Chairman)
Gerardo Werthein (Vice President and Vice Chairman)
Valerio Cavallo (CFO)
industry = Telecommunications services
products = Phone services
revenue = profit 2.27 billion USD (2005)
net_income = loss 105.2 million USD (2005)
num_employees = 14,542 (2005)
homepage = [http://www.telecom.com.ar/ www.telecom.com.ar] es

Telecom Argentina S.A. (nyse|TEO, Buenos Aires Stock Exchange:TECO2) is the major local telephone company for the northern part of Argentina, including half of the city of Buenos Aires. Briefly known as Sociedad Licenciataria Norte S.A., it quickly changed its name, and is usually known as simply Telecom within Argentina.

Telecom Argentina's local telephone market, together with Telefónica de Argentina in the southern part of the country, was a monopoly until 1999-10-08. Telecom also operates mobile phone service "Personal" and Internet service provider "Arnet".

History

In 1990, Argentina started to privatize most of its state-owned utilities: power, water, trains, and telecommunications, just to name a few. The monopoly of state-owned phone service ENTel was split into two territories: France Télécom was given the "upper half" of the country, from the middle to the north, and Telefónica was given the southern part. Each company was given an initial 7 year monopoly beginning on 1990-11-08. Initially other companies were given exclusive licenses for International long distance and cellular phone service also.

Both local phone companies turned their systems into profitable operations in just a few years, despite the terrible conditions they inherited from ENTel. In the worst years of ENTel, a line activation would take several years. The telephone wiring layout across the country was undocumented. At privatization in 1990, the wait was still 4 years to get new service and 40 days for repair. [http://www.telecom.com.ar/inversionistas/english/sotearc.html (now gone; accessed in 2006)]

Starting off with severe downsizings, Telecom Argentina started to invest into the country, but there was little outside capital investment; rather, a small portion of earnings were reinvested. Years later, all of the phone network was upgraded to a state-of-the-art system, from central telephone exchanges up to the wires going into homes; by 2005, 98% of the ENTel network infrastructure had been replaced. Finally, the dream of many people, having their own phone line, was a reality.

Unlike many other privatized companies, Telecom got a totally degraded and inefficient company and turned it into a working, profitable company. In contrast, the train lines (which cost the state roughly US$1,000,000 "per day" in losses to operate 30,000 km of railroads), were sold to private corporations, it still cost the state US$1,000,000 per day in subsidies to operate 1,400km of railroads.

In 2005, the Bank of New York was appointed as trustee, registrar and paying and transfer agent for Telecom Argentina's $1.5 billion debt restructuring, the biggest Argentine debt restructuring to date. The restructure involved the exchange of $2.8 billion in outstanding debt for newly issued exchange notes and cash, and involved consent requests and instructions for over 1100 creditors. [cite web
url=http://www.bankofny.com/htmlpages/npr_2005_1924.htm
title=The Bank of New York Appointed by Telecom Argentina as Trustee, Registrar, Paying Agent and Transfer Agent
date=2005-11-03
publisher=The Bank of New York
accessdate=2007-09-23]

Personal

Telecom Personal S.A., owned by Telecom Argentina, is one of only 4 mobile phone companies in Argentina. Personal uses a similar logo to Telecom itself.

Telecom Personal owns 67.5% of Paraguayan mobile provider Núcleo S.A., which started in 1998 and also does business under the brand name Personal but uses a somewhat different logo. [cite web
url=http://www.personal.com.py/n_html/empresa/quienes.htm
title=Siempre primeros!
publisher=Núcleo S.A.
date=2007-08-31
accessdate=2007-09-23
language=Spanish
quote=Somos el servicio de telefonía móvil PERSONAL ofrecido en Paraguay por la empresa Núcleo S.A. operativa desde el 24 de junio de 1.998. ... Nuestra empresa, Núcleo S.A., está conformada en 32.5% por ABC Comunicaciones (grupo paraguayo) y en 67.5% por Telecom Personal]

Criticism

Critics of Telecom argue that, when it received government subsidies to provide service in remote areas, it either didn't provide the service, or just installed public telephones. Critics also point to the high prices charged by the company, and to the fact that, unlike much of the world, Argentine customers have to pay per minute, rather than a fixed price.

In contrast, defendants of the system point out that the 011 area code (called AMBA, most of Gran Buenos Aires) provides local phone access to five to six million users (15-16% of the total population of the country), making a flat-rate type of service economically impossible.

Due to the lack of long requested flat telephone rates for local calls, specially to connect to Internet, a lot of users installed ADSL services from Arnet, Telecom's Internet service provider. The company was heavily criticised when it decided to limit ADSL users to 4 GB per month and charge for extra traffic, a decision which was promptly reversed.

Other critics to the company are centred on the lack of information on their offers, and obscure contracts with prices not including taxes, and other important information.

Ownership

France Télécom sold its part of the company to the Argentinian Werthein Group. As of 2007, current approximate ownership of Telecom Argentina is [ [http://www.telecom.com.ar/institucionales/estructura/estructura.html Estructura del capital] es, Telecom Argentina.] :
*54.74% by Nortel Inversora S.A., itself a consortium made up of:
**Werthein Group (48%)
**Telecom Italia group (50%)
**France Télécom group (2%)
*41.5% publicly traded
*4.21% employee stock ownership program

ee also

*Argentine telephone numbering plan
*Communications in Argentina

References

External links

*Telecom official sites:
** [http://www.telecom.com.ar/english/http://www.telecom.com.ar/inversionistas/english/sotear.html Telecom Argentina S.A. corporate information] - English language version
** [http://www.arnet.com.ar/ Arnet] es - Telecom's Internet service provider operation
** [http://www.personal.com.ar Personal] es - Telecom's mobile service
* [http://gurukul.ucc.american.edu/initeb/dh7566a/private.htm Information Technology in Argentina: Privitization and Deregulation] - overview of the Argentine telephone system as of 1997
* [http://www.lynxtech.com/citpubs/dlat/Arg_a1.htm Datafile of Latin America Telecommunications] - entry for Argentina
* [http://www.francetelecom.com/en/financials/investors/news/CP_archives/cp030909.html France Telecom divests its stakes in Argentina and El Salvador] - press release