Triple-play in Argentina: Clarín is a Potentially Serious Threat to Telcos
Historically, the Argentine cable industry has been more developed than that of its South American neighbors. It is also increasingly in the hands on one player—the media conglomerate Grupo Clarín. With virtually every Argentine telecoms player announcing plans to offer triple-play services in 2006, the cable industry could have a strong negative impact on the incumbent operators’ voice and DSL subscribers. Whether this happens will depend on how quickly operators can bring their networks on line and start bundling their still-separate services.
The second half of 2005 witnessed a string of triple-play-related announcements by the major Argentine telecommunications players, who either launched service elements or detailed their plans to unveil full packages next year. Grupo Clarín, became the first provider to offer voice, Internet, and pay-TV services after launching a VoIP subsidiary, Vontel, in mid-July. The response from Telecom Argentina and Telefónica came later, in October and November, when the operators announced the initiation of triple-play trials and plans to fully join the fray in 2006. Other players that have announced plans to offer triple-play service include Ertach, Telmex Argentina, and Iplan.
Grupo Clarín’s first-move advantage is not complete, and the conglomerate still has a long way to go before it can legitimately claim to be a triple-play provider. Clarín offers its services through three different and distinct companies: cable TV, primarily through Multicanal; broadband and Wi-Fi services, through Prima; and now voice, through Vontel. It does not yet bundle the products together, meaning the end-user must still do the service aggregation. Thus, Clarín has not yet offered the biggest attraction of triple-play from an end-user perspective: the savings gained by taking three services from a single company. We expect Clarín to draw its subsidiaries’ commercial offerings closer in the first half of 2006, keeping the pressure on the telecom incumbents.
Telecom Argentina and Telefónica are playing defense, but their response to the challenge was nonetheless timely. Of the two, Telecom’s plans are more ambitious. After issuing three bond series worth a combined US$470 million in early December, the incumbent said it will invest US$120 million in deploying an IP NGN in 2006. It is currently trialing a triple-play service in Southern Argentina, and plans to make the service available in 2H2006. Telefónica is currently negotiating packages with content providers and stands to benefit from its strong Latin American presence; additionally, it will draw from its experience with the Imagenio service in Spain.
Grupo Clarín is clearly committed to being the country’s main pay-TV provider. It has controlled Multicanal, the country’s largest pay-TV company (1.5 million subscribers), since 1992. In addition, it holds a 20 percent stake in Supercanal, a pay-TV provider with roughly 500,000 subscribers in the periphery regions. In August of 2005, it announced the purchase of 25 percent of the country’s second-largest pay-TV provider, Cablevision, which has 1.3 million subscribers. The investment has raised the possibility of an eventual consolidation by the Grupo Clarín, especially since Cablevision’s other owners, US investment funds Fintech Media and Hicks, Muse, Tate, and Furst are strategic investors looking for medium-term exits. As the three cable operators extended into basic voice services, they give Clarín a large and growing platform with which to compete against the incumbent telecoms in the provision of broadband. However, a merger between Cablevision and Multicanal would draw close scrutiny from the Comisión Nacional de Defesa de la Competencia, the country’s antitrust watchdog.
