Argentina Telecom New Era Of Competition.

Business Editors

NEW YORK--(BUSINESS WIRE)--March 20, 2000

Deregulation, new technologies and foreign capital have encouraged growth and competition in Argentina's telecommunications sector, according to a new research report published today by the international rating agency Fitch IBCA. In light of the introduction of full service competition, a more aggressive pricing environment should develop, especially related to long distance services.

`The telecommunications sector in Argentina is in the early stages of a monumental transformation,' said Augustine Okwu Jr., Director, Fitch IBCA. `The country is poised to enter a new era of rational competition - one that will replace nearly ten years of a highly regulated system that effectively supported a dual monopoly.'

The new Fitch IBCA report concludes that the Argentine telecommunications sector has experienced dramatic improvement over the past eight years. Lines in service have more than doubled since 1990 and digitalization has increased from 13% to full digitalization by year-end 1998. At June 30, 1999, Argentina's teledensity was 23%, representing the highest phone penetration rate in Latin America with the exception of Uruguay.

The new Fitch IBCA report identifies the main credit themes affecting the Argentine telecommunications sector, including overall economic outlook, foreign exchange risk, regulatory change, interconnection regulation, collection policies and operators' credit profile.

`A historically anti-consumer, pro-incumbent regulatory authority that defers to political pressure has overseen Argentina's telecommunications sector, but, should the newly elected Alliance party act on its pre-election pro- competition promises, heightened competition would ultimately lead to lower prices,' said Okwu. `Nonetheless, the Argentine telecommunications sector is still anxious, as the specific steps to be taken by the Alliance party are still an unknown factor.'

The Fitch IBCA report identifies several new players, supported by foreign capital, providing basic telephony product and offering consumers alternatives to Telecom Argentina S.A. (Telecom) and Telef[cent]nica de Argentina S.A. (Telefonica). For example, the two independent cellular operators that have been granted basic telephony licenses, Compania de Telecomicaciones Integrales S.A. (CTI) and Compania de Telefonos del Plata S.A. (Movicom), are supported by GTE Corp. and Bell South International, respectively.

For a copy of `A New Era of Controlled Competition' visit Fitch IBCA's web site `www.fitchibca.com'.