Argentine mobile operators unhappy with 5G tender rules

Argentina's three mobile operators have complained about what they see as obstacles to participating in the country's upcoming 5G tender under the conditions approved by regulator Enacom this week.

As BNamericas reported previously, there are three points in particular that generate the greatest concern among potential auction participants.

The focus on raising funds in the tender was one of the main problems underlined by Claro, Personal (Telecom) and Movistar and one of the reasons why the call for tenders took longer than expected. Despite months of negotiations, the final specifications approved have failed to convince operators.

"The price assigned to each of the 100MHz blocks in the 3.5GHz band is very high considering the macroeconomic situation in the country, of our clients and the sector," the three companies said in a joint statement.

Argentina has strict limitations on access to foreign currency to control the outflow of capital amid the delicate macroeconomic situation. The spectrum offered in the auction, however, can be acquired with pesos at the official exchange rate, which is currently approximately half of the exchange rate quoted in the financial markets and the illegal currency market.

According to the operators' calculations, the base price is 300% higher than that established in the Brazil's 5G tender. In 2021, Brazil raised US$8.5bn in the auction of six bands of radio spectrum, although more than 80% of that figure involves investment commitments.

Meanwhile, Chile raised US$453mn in an auction for four bands (700MHz, AWS, 3.5GHz and 26GHz) the same year.

The Argentine operators considered that the Brazilian tender "is one of the best examples of a 5G spectrum auction in the region."

The document sent by the operators also focuses on the reissue of the basic service plan, which they believe is a "clear imitation of DNU 690/2020", referring to decree 690 that implements price controls in the sector, which has been challenged and is now suspended for most operators.

Specifically, the conditions establish the obligation to offer a service plan for low-income sectors when 5G technology is used by more than 50% of the end users of the service. The beneficiaries of that plan may be "up to a third of the total number of users," divided between the tender winners.

However, it remains unclear what is understood as a universal basic service plan and the previous experience with DNU 690 showed that services were intended to be offered at prices below the costs. According to the operators, the implementation of that decree has had "negative, distorting and recessive effects for the country."

The third point criticized by the operators is the allocation of 100MHz of spectrum in the 3.5GHz band to state telco Arsat.

“The assignment of a free 100MHz block to Arsat is another contradictory, anti-competitive and irregular economic distortion. It is an act of enormous legal uncertainty," the operators said in the statement.

In addition, the specifications establish that any lots that are not awarded in the tender "could be assigned" to Arsat.

In addition to the review of these three points, the operators requested that the tender include the allocation of available 4G spectrum.

"It is necessary, in order to efficiently address the growth of current mobile networks, that the allocation of 4G spectrum that has not been used for more than seven years be included in a competitive process," they stated.

There is 210MHz available to be offered, involving surpluses in the 700MHz, 900MHz, AWS (1,700-2,100MHz), 1,900MHz and 2.5GHZ bands, according to GSMA.

Part of this spectrum had been reserved in the past for Arsat, but was never used by the state operator.

"Claro, Personal and Movistar want to invest and compete, we want to collaborate with the development of the country and we want to deploy 5G, which is a very important step that Argentina has to take and take well," they said.

"We reiterate the need to review the conditions, given that in this scenario the deployment of 5G is impossible and, consequently, it will be difficult for mobile operators to participate in the tender," they underscored.

THE TENDER BASES APPROVED

The bases approved by the regulator are aimed at awarding three lots of 100MHz each in the frequency bands between 3300MHz and 3600MHz for the provision of 5G services.

The document has been approved by the board of the regulator, although it was rejected by two of the members representing the parliamentary opposition to the government.

The base price for each of the blocks is set at US$350mn and the spectrum will be provided for a period of 20 years.

Only operators with at least 50,000 declared accesses, that provide services in 10 locations in the country and which have net assets of at least 10bn pesos (US$28.5mn) may participate in the tender.

The specifications establish certain measures remedies for one of the concerns that the operators had previously expressed, involving the possibility of accessing a special import regime to buy equipment necessary for deployment. 

They also state that the regulator will be responsible for verifying the migration of existing services in the bands put up for auction.

The resolution approving the specifications also imposed a maximum concentration of 200MHz of radio spectrum for each licensee by operating area.

COVERAGE OBLIGATIONS

In addition to the payment for the spectrum, the bases establish that the tender winners must commit to the deployment of the new-generation mobile network.

Within the first 12 months, at least one base station must be established in the city of Buenos Aires, provincial capitals and the cities of Mar del Plata, Bahía Blanca and Rosario.

Within 30 months, there must be at least one base station in towns with more than 100,000 residents that are not included in the first stage.

In a third stage, to be completed within 48 months, the service must be provided with at least one base station in towns with more than 50,000 residents.

And, within 66 months, operators must have at least one base station in towns with more than 30,000 residents. After 84 months, the network must be extended to towns with 20,000 residents.