Telecom Argentina is said to have reached an agreement to merge with cable TV player Cablevisión following sector reforms allowing telecom operators to enter the pay-TV market.
The pending merger, reported over the weekend by Reuters, would unite one of Argentina's biggest providers of telecom services with the country's pay-TV giant and position the new-look player for a launch of "quad-play" offerings that bundle fixed, mobile, broadband and TV services in a single bill.
The deal, according to Reuters, has yet to secure regulatory approval but would see Telecom Argentina (NYSE: TEO) issue 1.184 billion shares and leave Cablevisión shareholders with about 55% of the combined company.
It comes after Argentinian President Mauricio Macri introduced legislation last year allowing telecom players to offer pay-TV services.
Analysts had long predicted a deal between Telecom Argentina and Cablevisión should regulation allow it. Without such a merger, the telco would have to make considerable investments in networks and content to mount an effective challenge in the pay-TV market.
Industry observers believe the deal between Telecom Argentina and Cablevisión could trigger more takeover activity in the market, potentially involving the local subsidiary of Spain's Telefónica, which has previously expressed interest in acquiring pay-TV assets in Latin America, according to Reuters.
Telecom Argentina was bought in March last year by investment group Fintech, which is also a minority shareholder in Cablevisión.
— Iain Morris, , News Editor, Light Reading