The US government has been accused of attempting to undermine Telefonica de Espana’s exclusive control of Argentina’s telephony services, according to a report in El Pais. The paper says that envoys are regularly being sent to Buenos Aires, who, egged on by powerful local business groups hungry for a slice of the telecommunications cake, are attempting to drive a wedge between the Argentinian government and the Spanish monopoly phone company. The paper further adds that pressure is coming also from several of the leading US operators and will be maintained until 1997 when Telefonica’s contract with the Argentinian government ends. Fustino Rivero, president of Telefonica Argentina, is confident the contract will be extended automatically for another five years, since all our objectives here have been attained with consummate ease.
Well-placed
He said Telefonica was well-placed to pick up further business in the Latin American continent, a market estimated to be worth $200,000m between now and the year 2000, half of which is waiting to be gleaned from multimedia, cable television, cellular telephony and other services. Telefonica is already present in Chile, Colombia, Ecuador and Venezuela, and last May it outbid GTE Corp and Southwestern Bell Corp, among other international groups, to take stakes in two telephone companies in Peru, offering more than $2,000m (CI No 2,366). Rivero suggested that this controversially high bid should be considered in the light of the Spanish operator’s failure, prior to this, to win a stake in Telmex in Mexico. In his opinion, Telefonica is now in a good position to make inroads into the Brazilian market. If such a venture were to meet with success, the central part of South America might feasibly fall into Telefonica’s hands, including the company Telecom, which operates in the north of Argentina and is currently controlled by a Franco-Italian consortium. El Pais quoted sources in Buenos Aires as stating that Washington’s overriding fear was that in the next few years Europe will win 10% of the Latin American market at the expense of the US and Japan, especially if it consolidated its alliance with Mercosur, which is made up of Brazil, Argentina, Uruguay and Paraguay. Meanwhile, Telefonica said it achieved profits of more than $400m a year in Argentina and plans to strengthen its presence there with an investment of $1,100m in 1995. It is, perhaps, interesting to note that when the Spanish, French, British, Italian and Belgian embassies complained to the government about the excessive intervention of the tax authorities in privatised companies, Telefonica was not en thusiastic about kicking up a storm; in spite of all the difficulties, the firm is more than happy with its current position.
