How import and forex problems threaten Argentina's ICT sector

Argentina’s ICT sector, which depends on international trade for hardware and services, is facing problems due to economic crisis and lack of central bank reserves.

Problems are even more acute regarding a planned 5G tender.

“Some authorizations are starting to come out, now we will have to see if the pace is sustained,” Telefónica Argentina's director of regulation and public affairs, Alejandro Lastra, said during a press conference in response to a question from BNamericas.

The company places import orders on a weekly basis. The import regime, also covering ICT products, was modified in October, moving from a quota system to one where authorities review each order and authorize the operation and access to foreign currency in the single exchange market.

The official exchange rate is 168 pesos to the dollar, compared to 300 pesos in the informal market.

Industry sources consulted by BNamericas said no authorizations for importing goods or services were issued from mid-October to end-November.

Difficult access to foreign currency complicates equipment import and the payment of software licenses, roaming services, cloud, content, television signals and even payments for the use of IP addresses.

A source recently consulted by BNamericas said without import authorizations, operators could run out of stock in January or February.

The president of business chamber ATVC, Walter Burzaco, previously warned that problems with imports "erode the networks."

However, regulator Enacom and the commerce department seem to have taken steps toward a solution. “It's delayed, but it's not stuck anymore,” a source, requesting anonymity, told BNamericas, adding that import authorizations over US$10,000 are hard to obtain.

Metrotel product manager Diego Janse told BNamericas that the company isn’t heavily affected by the situation as it plans acquisitions on an annual basis. "There is other equipment or material with different circulation that needs faster purchases," he said.

But Janse added that due to licensing payment problems, “we had to adjust payment conditions with suppliers.”

Before the change of import regime, a decision to defer payments to 180 days had complicated negotiations with hardware and software suppliers.

"The issue of imports and payments for goods and services abroad is critical for the operation of the networks," Alejandro Quiroga López, Claro'sregulation director, told BNamericas.

Talking to the press about the 5G auction planned for next year, Lastra highlighted the importance of guarantees that operators can import the required goods and services, so they can invest in deployment.

An ATVC event was told that Argentina’s ICT industry invests some US$2bn a year.