Paraguay’s 5G Auction Faces Major Setback as Telecom Argentina Withdraws

A contentious bidding process for Paraguay’s 5G network expansion has escalated dramatically, with Telecom Argentina announcing its formal withdrawal. The company, which operates in Paraguay under its ‘Personal’ brand, is protesting conditions it claims fundamentally undermine competitive market principles and technological neutrality. This move potentially excludes the telecommunications giant from a multi-billion euro infrastructure project.

Disputed Bidding Criteria Spark Exit

The core of the dispute centers on specific equipment requirements set by Paraguayan regulators. Telecom Argentina asserts that the mandate for hardware to be manufactured in countries with formal trade relations with Paraguay effectively blocks major global suppliers, including Huawei and ZTE, from participating. The company argues this violates the principle of technological neutrality by artificially limiting equipment choices.

Further complicating matters is a demand for a SCS 9001 certification, a standard that currently no manufacturer worldwide holds. The company highlights that this requirement renders the bidding process practically unworkable, especially as established international standards like ISO or NESAS are reportedly not being accepted. Telecom Argentina has labeled these criteria as lacking any sound technological or economic justification.

Auction Competition Dwindles

The fallout from the disputed terms is already reducing competition. Telecom Argentina’s withdrawal follows a similar exit by Tigo, a unit of Millicom. This leaves only two remaining bidders for the national 5G project: America Movil’s Claro and a new market entrant, Nubicom. This significant reduction in participants raises concerns about the competitiveness of the auction and could shape the Paraguayan telecom landscape for years to come.

Should investors sell immediately? Or is it worth buying Telecom Argentina?

Financial Pressures at a Strategic Crossroads

This strategic decision in Paraguay coincides with a period of financial turbulence for Telecom Argentina. The company’s recent half-year report revealed a stark contrast: impressive revenue growth of 44.2% to €3.36 billion, yet a swing into a net loss of €75.6 million, compared to a profit the previous year. This loss was primarily driven by unfavorable financial results.

The recent acquisition of Telefónica Móviles Argentina (TMA) is a key factor, boosting top-line revenue but also significantly increasing the company’s debt load. Net debt surged by 38.2% to exceed €4 billion. On a positive note, the company demonstrated investment discipline, with capital expenditures holding at 14.3% of total revenue.

The critical question now is whether Telecom Argentina can afford to strategically withdraw from a key growth market like Paraguay in the long term, or if this reflects a deliberate corporate shift toward prioritizing quality and sustainable investment over expansive market presence.