Argentina’s government is going directly into the 3G telecom business to bring more competition into market. The Argentinean government thinks that its people are tired of monopolies and deserve more competition when using smartphones and other mobile devices to access the Internet.
On Wednesday, planning Minister Julio de Vido announced that the government is calling off its 3G spectrum auction and will go into the business itself through its state-owned satellite company. As per this release, ARSAT is already building three new satellites to provide the service. De Vido says small companies will now be able to become Internet providers by using the government's 25 percent share of the 3G spectrum.
According to the government, Argentina's $14 billion mobile phone market is now controlled by America Movil's Claro (News - Alert), Telecom Italia's Personal and Telefonica's Movistar.The planning Minister said that this move should also give consumers more choices as 4G devices roll out.
Media reports show that the Argentine telecommunications market is one of the most advanced telecom infrastructures in Latin America and telecom revenue is expected to reach more than $14 billion in 2012. Consequently, it is a highly profitable market for its two main players, Telecom Argentina (News - Alert) and Telefonica de Argentina.
Both these telecom companies reported strong financial results for the first quarter 2012. For example, Telecom Argentina reported ,in comparison to fourth quarter 2011, that revenue remained steady at $1.2 billion with net income growing by 16 percent to $157 million. For the same period, Telefonica de Argentina’s (News - Alert) revenue grew by 12.9 percent to $1.1 billion, but OIBDA fell 11 percent to $345 million.
Similarly, both are seeing substantial growth in their Argentine mobile and Internet operations because as in other Latin American countries fixed-line revenue is gradually decreasing. Also, reports show that Argentina has one of the highest rates of Internet use in Latin America, third after Brazil and Mexico.
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Edited by Brooke Neuman