After nearly two years of fits and starts, the government of Argentina finally awarded six personal communications services licenses for a total consideration of about $850 million.
The government awarded two PCS licenses each in the northern and southern regions of Argentina, as well as two licenses in the lucrative Buenos Aires metropolitan area.
GTE Corp. bid $301 million for one of the 40-megahertz licenses covering Buenos Aires, while Telecom Argentina and Telefonica de Argentina teamed up under the name Unifon-Personal to bid $350 million for the other license. The minimum bid for each of the Buenos Aires licenses was $150 million.
“The regulator obviously had assumed it would get more than the minimum bids, but I think it’s fair to say that to more than double the minimum bids was a significant success for the regulator,” said Erica Eppinger, senior research analyst at Pyramid Research in Cambridge, Mass.
Movicom, which is 65 percent owned by BellSouth Corp., and Telefonica pledged $53 million and $56 million respectively to secure licenses in the northern region. Movicom also won a license in the southern region for $46 million, and Telecom Personal S.A., which is owned almost entirely by Telecom Argentina, won the other license in the southern region for $43 million.
The minimum bid for the northern region was $50 million, while the minimum bid for the southern region was $40 million.
The license awards essentially create four nationwide wireless providers in the country-GTE (with its stake in CTI Holdings), Movicom, Telefonica and Telecom Argentina, said Eppinger.
The licenses originally were scheduled to be auctioned in the fall of 1997 until a series of legal disputes and alleged scandals delayed the auction until this month.
Eppinger characterized the licensing process as a tumultuous one in which the regulatory body responsible for awarding the licenses would begin the tender process and then make a change, drawing protests from the operators vying for the licenses and landing the process in court.
“It’s remarkable that the regulator-SECOM-in the end was able to carry off such a successful tender financially given all the stops and starts they went through,” said Eppinger.
Despite the many delays, the bidders remained keenly interested in securing licenses in Argentina. Eppinger said cellular penetration rates in Argentina traditionally have been among the highest in Latin America. Eppinger also noted another reason the licenses were so sought after is because operators will be allowed to offer basic telephone service via fixed wireless systems when the country’s telecom market is opened later this year.
