MercoPress. South Atlantic News Agency

Argentina strips French company of licence

Argentine president Nestor Kirchner stripped a French owned company of its operating licence in the radio spectrum, the most aggressive action against a foreign investor in Argentina. The decision was announced hours before Mr. Kirchner's official state visit to Spain where he expects to face claims from Spanish investors regarding privatized public utility companies.

Under a 500 million US dollars 1997 contract Thales Spectrum, belonging to Europe's biggest defence contractor, operates the airwaves used by mobile phone companies, radio and television stations and other "sensitive" communications areas.

On announcing that the service would be taken over permanently by the Argentine government, Cabinet Secretary Alberto Fernández said that "this service can't be conceded to the private sector. The results of the privatization have not been positive; the company is in arrears with licence payments and has not made the investments agreed in the contract".

President Kirchner and his closest cabinet members have been involved for weeks in an aggressive campaign blasting public utility companies for not having maintained adequate investment levels and having charged for years rates in US dollars, "well above international averages".

Since the collapse of the peso and the Argentine economy in 2001 public utility rates have been frozen, turning the public services in Argentina into some of the cheapest in Latinamerica.

The Kirchner administration argued that the French consortium had breached contract by not meeting financial contractual obligations and anticipated that "authorities would investigate the company's record" and the privatization process, suggesting that there could be illegal actions from government officials of the time. The contract dates from the Menem administration that is under an ongoing obsessive scrutiny from the Kirchner administration.

Analysts believe the retaking by the Argentine government of the radio and communications spectrum is a unique case, highly tinted in politics, since in the rest of the continent this field has always remained under government control.

In Paris the spokesperson for the French Ministry of Foreign Affairs said the government is "following closely" events regarding Thales Spectrum.

"It will certainly be one of the points of the agenda" to consider with Argentine authorities when French Foreign Affairs minister Dominique Villepin visits Buenos Aires next week.

Mr. Villepin is scheduled to visit Chile, Argentina and Brazil.