Telefónica has announced a US$1.2 billion deal to sell its entire stake in its Argentinian unit to Telecom Argentina, though the transaction could be blocked by government intervention over competition concerns.

In a brief statement, Telefónica said the deal is part of its strategy to reduce exposure in Latin America and create value for shareholders. The announcement follows speculation about Telefónica divesting from multiple Latin American markets, including Mexico and Peru.

Telecom Argentina stated that the acquisition will be financed through loans and that it plans to invest in fibre and 5G deployment in the coming years, while also expanding its capabilities in video on demand, IoT, corporate services, fintech, e-commerce, AI, and cloud services.

Telecom Argentina CEO Roberto Nobile said: “With this transaction, Telecom once again demonstrates its commitment to continued investment in Argentina, despite the current macroeconomic conditions, which provide certainty and stability for private and competitive investment.”

Argentina’s telecoms regulator ENACOM and competition authority CNDC have been instructed by President Javier Milei to investigate whether the deal would create a monopoly.

A translated statement from the Office of the President warned that the acquisition could give Telecom Argentina control over 70% of the country’s telecommunications services, effectively creating a monopoly that has benefited from decades of state support.

“If this is the case, the national government will take all necessary measures to prevent it,” the statement added.

Telecom Argentina and Telefónica originally acquired divisions of the state-owned monopoly ENTel in 1990, when Argentina moved to privatise its telecoms sector.