Convergencia Research
Friday, January 07, 2022

Alliances Map in Argentina 2021

The entry of investment funds and infrastructure sharing alliances boost movements in the sector

Alliances Map in Argentina 2021 - Credit: © 2021 Grupo Convergencia
Alliances Map in Argentina 2021 - Credit: © 2021 Grupo Convergencia

The 26th edition of this Map once again brings Grupo Werthein to the scene as the protagonist of the main purchase-sale operation in the Argentine communications sector in 2021. The firm took possession of 100% of Vrio in November, after acquiring it from the United States. AT&T.

The operation has an impact in Latin America, due to Vrio's footsteps in eleven countries in the region, with some 10.3 million subscribers in 11 countries in the region and almost 9,000 employees. It includes the business in Brazil through the Sky brand; in Argentina, Barbados, Chile, Colombia, Curaçao, Ecuador, Peru, Trinidad and Tobago and Uruguay, through Directv Latin America; and the OTT Directv GO, in Argentina, Brazil, Chile, Colombia, Ecuador, Mexico, Peru and Uruguay. In addition, Vrio's infrastructure includes satellites and transmission centers that distribute content in 4k format; a marginal broadband operation, along with other investments such as Torneos y Competencias in Argentina and WIN Sports in Colombia. Grupo Werthein, for its part, had already been part of Argentina's media and communications ecosystem after joining Telecom in 2003. Its departure from the operator took place in 2017.

Grupo Werthein's progress with the purchase of Vrio aligns with two of the three trends that Convergence sees in the movements of mergers and acquisitions on a Latin American and global scale. The first consists of an increase in the presence of investment funds in telcos. Its entry is becoming viable, in general, where there are separations of services and infrastructure.

Second, a new wave of mergers and acquisitions restructures the ownership scheme in the media and entertainment area. The two events that stood out in 2021 are the Discovery-WarnerMedia merger and the purchase of the Metro Goldwyn Mayer (MGM) studios by Amazon. The integration of Discovery and WarnerMedia will give rise to Warner Bros. Discovery from the spin-off of WarnerMedia from AT&T: pending final regulatory approval, the merged will be 71% AT&T and 29% Discovery. With this transaction and the sale of Vrio, AT&T this year consolidated the reduction of its footprint in the entertainment business, to focus on 5G and fiber, although it retains HBO Max as a standard in the battle of streaming platforms.

Finally, neutral network operators gained weight during 2021 and joint ventures multiplied for the creation of InfraCos (or infrastructure companies) and new forms of collaboration in search of an efficient deployment, operation and maintenance of networks. The greatest exponent of this trend in the Argentine market is the infrastructure sharing agreement between Sion and Telefónica, for the migration of some 200,000 accesses from the Spanish in the south of the country to fiber. Sion, a local ISP listed on the stock market, also innovated with the constitution of the first social bond on the Stock Market for telecommunications. It presented Series VII of SME Negotiable Obligations, for a nominal value of $ 200 million, which will be used for laying fiber. 

DirecTV is another of the operators in Argentina that will use the shared infrastructure service provided by Metrotel, in the northern area of ??Greater Buenos Aires, to provide Internet over fiber optics. 

As part of the trend towards the separation of services and infrastructure, the division of towers continues. At the beginning of 2021, the subsidiary of Telefónica Telxius (in turn owned by KKR and Pontegadea) agreed with American Tower to sell its telecommunications tower division in Europe (Spain and Germany) and in Latin America (Brazil, Peru, Chile and Argentina ), for € 7.7 billion. And América Móvil created Sites Latin America to group its 36,000 towers in the region. 

Edenor's laying is 80% underground and 20% through poles. Only in the City of Buenos Aires and in the Buenos Aires districts of San Martín and Tres de Febrero, the company has 20,000 low voltage poles. Its attractiveness for the ICT infrastructure business is also in its fiber network of more than 2,200 kilometers. 

With regard to Edesur, a group of businessmen including the owner of the Indalo Group, Cristóbal López, made a purchase offer. 

In addition, Arsat will have 4,400 km of fiber optics from the High Voltage Electric Power Transportation Company (Transener) to provide connectivity in 14 provinces. The state company will have the right to use three pairs of fiber optics that are not used in 15 lines in areas included in the 500kV I Federal Electric Transportation Plan.

Meanwhile, Torneos, GSRM and 777 Partners created the company Argentina Football Distribution (AFD) to commercialize the international rights of Argentine football for open TV, pay TV, PPV and digital platforms of the Professional Football League for six seasons starting in 2021 .

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