Concession to go back under state control
BUENOS AIRES — The government revoked Thales Spectrum’s $500 million concession to run Argentina’s radio spectrum for broadcast TV, radio and other services on Monday after the French defense electronics company allegedly failed to meet 70% of contract obligations.
Thales fell behind in royalty payments, neglected to make more than $100 million in promised investment and posted profits between 1997 and 2001 that exceeded contractual limits, said cabinet chief Alberto Fernandez.
President Nestor Kirchner intends to put the concession back under state control, Fernandez said. Argentina was the first country to privatize oversight of its spectrum.
Long criticized, the concession and its private operator came under closer scrutiny last year when the French magazine Le Point reported that Thales may have paid $25 million in bribes to win the 15-year contract in 1997.
Thales took a fee from broadcasters, telecommunication companies and other firms to manage the spectrum, and then paid a royalty to the state.
It also failed to control piracy — the spectrum is clogged with more than 5,000 illegal broadcasters because of corruption and lax regulation.
In the 1990s, then-President Carlos Menem, who awarded the contract to Thales, reportedly gave out several hundred frequencies as political favors; the beneficiaries resold the licenses for a profit.
The Kirchner administration also criticized the Menem government for poorly regulating Thales. Justice Minister Gustavo Beliz said he would launch a legal investigation to find out what happened.