New Argentina Telefonica-BellSouth Unit To Invest ARS450 Million

BUENOS AIRES -(Dow Jones)- Movistar, the new cellular phone operator produced from Telefonica Moviles' (TEM) purchase of U.S.-based BellSouth Corp's (BLS) Latin American operations, will invest ARS450 million ($1=ARS2.92) in Argentina this year, company officials said Tuesday.

Telefonica Moviles is a unit of Spanish concern Telefonica (TEF). The local subsidiary of the mobile phone company and Movicom, BellSouth's Argentine operator, launched on Tuesday its new Movistar brand. Officials said Movistar was also being introduced simultaneously in 12 other countries across the region.

In Argentina, Telefonica Moviles will funnel the ARS450 million investment toward improving and expanding its network. Eduardo Caride, the company's director of Southern Cone operations, told reporters on Tuesday that the company plans to spend more than ARS450 million on capturing new clients, though he declined to name a specific amount.

Movistar is now the leading wireless operator in Argentina with more than 5.7 million clients, using end-2004 data from Telefonica Moviles' Unifon and Movicom BellSouth. The combined total represents a market share of 42%, according to company data. The merger makes Movistar the leading wireless provider ahead of former market leader Telecom Argentina (TEO), whose Personal unit had 3.835 million subscribers at the end of the first quarter. Telecom Argentina officials said last month they are seeking a 30% market share by the end of 2005.

The youngest operator in the Argentine market, CTI Movil, had 3.6 million clients at the end of 2004. It is a unit of Mexico's America Movil (AMX).

Caride said he expects the total cellular phone market in Argentina to reach around 24 million subscribers by 2008, with Movistar adding between 2 million and 3 million more clients by then.

Meanwhile, Telefonica Moviles will continue operating both the GSM network it already uses and Movicom BellSouth's CDMA system.

"We're going to maintain the two systems," Caride said. "All growth we're going to do will be in GSM. But we'll keep CDMA alive for those that prefer it."

Movicom BellSouth was the only Argentine wireless operator using CDMA technology. Caride said that when Argentina's GSM network is ready for 3G, or third-generation, there will be some "convergence" so all subscribers are using the same system. The executive didn't give a timeframe for when that might happen.

CDMA is the more advanced network in the country, though Telecom Personal, Telefonica Moviles and CTI Movil have all been aggressive with rolling out their own GSM networks.

-By Wailin Wong, Dow Jones Newswires; 5411-4311-3125; wailin.wong@dowjones.com

(END) Dow Jones Newswires"

Posted to the site on 5th April 2005