Kirchner Extends Nationalization Threat to Other Groups like “Telecommunications Companies and Banks”
Spanish firms are engaged in a wide array of enterprises in Argentina
El País: Kirchner extiende su amenaza a otros grupos como “telefónicas o bancos”
David Fernández reporting from Madrid April 16, 2012
The expropriation of YPF could be only the beginning of a nightmare for Spanish businesses. During her announcement of the nationalization, Argentinean President Cristina Fernández de Kirchner threw down the gauntlet before other foreign business interests in the country, like “telecommunications companies and banks”, about the “necessity” of reinvesting their earnings in Argentina.
After speaking about Argentina Airlines and its disappearance, the president moved on to comment on other sectors in which Spain has investments in Argentina. “We’ve made it clear that the businesses that are here, even if their stockholders are abroad, are Argentinean businesses,” she began. She referred to “telecommunications companies, some of which are Spanish and which have recently submitted us to blackouts. I hope that the Ministry will promptly respond to this,” she charged, clearly referring to Movistar. “And the foreign banks, as well…in sum, we don’t have a problem with profitability, but these profits must be reinvested in the country in order to help the country grow,” Fernández resolved.
The internationalization of Spanish businesses began in Latin America, and Buenos Aires was one of the first ports of call for these then-incipient multinational corporations. In recent years, the importance of Argentina on the bottom lines of these sought-after businesses has decreased in favor of other economies in the region (principally Brazil, Mexico, and Chile), but the Argentinean market continues to be a net contributor. This is the exposure that the principal Spanish companies have to Argentina, according to fiscal 2011 data.
Repsol: YPF provided 17.42% of operating revenues (~€11,105,000,000) and 25.61% of gross profit (~€1,231,000,000). Last year, Argentina received more of Repsol’s investment money than any other country (€2,182,000,000, 33% of the total). There are 15,119 Argentineans on Repsol’s payroll, 32% of the total, making them the second most numerous nationality on their staff after Spaniards.
Telefónica: Kirchner, without referring explicitly to the Spanish operator, has sent a message to Telefónica in reminding them of the “blackout” that some enterprises “have submitted us to recently”. This April 2, a breakdown in Telefónica’s Argentinean affiliate’s mobile phone service affected 16 million users and a smaller number of landline users. After the blackout, the Argentinean government signaled that it would study how to impose the “maximum” fine possible on Movistar, which indicated its intention to compensate its clients in the country for the blackout.
Telefónica of Argentina has licenses which permit it to provide landline, cellular, and Internet telephone services. These licenses will not expire, but as the operator recognizes in its annual report, “they can be cancelled by SECOM (the Secretary of Communications) for failure to complete the terms of the license”.
Telefónica has 21.9 million clients in Argentina, principally for its mobile phones (15.9 million users); it enjoys a 29.8% market share in the cellular market. The net total of the bills for this division in that country last year was ~€3,174,000,000, while its Operating Income Before Depreciation And Amortization (OIBDA) reached ~€1,085,000,000. Telefónica’s Capital Expenditure (CAPEX) in Argentina in 2011 was €449 million.
Banco Santander: Santander Río is the country’s principal private bank, with 358 offices, 2.5 million individual clients, and 6,777 employees. In 2011, the affiliate had gross earnings of €926 million, net earnings of €472 million, and €287 million in profits. Argentina contributes 3% of the Santander Group’s profits.
BBVA: The entity controls 76% of the capital of BBVA Banco Francés. In 2011, the Argentinean division earned a net profit of €315 million and an attributed profit of €157 million, a quantity which represents 5.2% of the group’s total profits. BBVA has 4,844 employees in Argentina, 4.4% of its total employees.
Endesa: The services of the generation and transportation of electricity provided by Endesa’s Argentinean affiliate netted Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) of €118 million in 2011. In addition, since the beginning of April last year, two interconnecting lines between Brazil and Argentina have begun to receive regulated remuneration, producing an EBIDTA of €127 million. The distribution business, for its part, had operating losses of €23 million, as greater fixed costs as a consequence of inflationary recovery in the country could not be recuperated by the bills charged to clients.
Gas Natural: The distribution of gas in Latin America earned the company an EBITDA of €621 million in 2011. Brazil, Colombia, and Mexico are Gas Natural’s principal markets; Argentina only contributed €27 million of its EBITDA.
Mapfre: Argentina is the insurer’s fourth most important market in Latin America. In 2011, it contributed €457 million in premiums (2.33% of the insurer’s total) and €18 million to Mapfre’s bottom line.
DIA: The distributor sold a total of €11,123,000,000 in products last year. Its principal markets are Spain, Portugal, and Brazil. Argentina is fourth, although it was the fastest-growing market in 2011, contributing 7.8% of the chain’s sales (€868 million). DIA opened 47 new stores last year for a total of 495 there.
Prosegur: The security company grossed some €500 million in the Argentinean Area, which also includes Paraguay and Uruguay, in 2011.
Codere: Codere Argentina is the principal operator of bingo sales in the province of Buenos Aires, with a total of 14 functioning rooms and more than 5000 recreational machines installed. This South American country contributes more to the group’s revenue and EBITDA than any other, €553 million and €165 million respectively.
NH Hoteles: On December 31, the group had 13 hotels open in Argentina (11 owned and 2 others under management) with a total of 2049 rooms.