Telecom Argentina S.A. (TEO): 5 FORCES Analysis [Nov-2025 Updated]

You're trying to map out the competitive landscape for Telecom Argentina S.A. (TEO) right after that big TMA acquisition, and frankly, the market dynamics are tight. We need to see if gaining scale helps them manage the intense rivalry in this oligopoly, especially when they are planning to invest around 18% of revenues in 2025, while simultaneously grappling with a net loss of P$272,543 million in the first nine months of 2025 and suppliers holding sway over dollar-denominated 5G gear. Honestly, the key question is whether the high entry barriers offset the customer leverage and the constant threat from OTT substitutes; you need a clear view of these pressures before making any call. Dive below to see the force-by-force analysis that distills these near-term risks and opportunities.

Telecom Argentina S.A. (TEO) - Porter's Five Forces: Bargaining power of suppliers

When you look at the supplier side for Telecom Argentina S.A., you're looking at a classic case where a few powerful global entities dictate the terms for essential, high-cost inputs. This leverage is amplified by the company's ongoing, massive infrastructure upgrade cycle.

The power of these suppliers is high because Telecom Argentina S.A. is deeply reliant on them for the core technology that drives future revenue, namely 5G and network infrastructure. For instance, the company confirmed an intention to invest around 18% of its revenues in 2025 for these capital-intensive projects. This signals a significant, non-negotiable demand for vendor services and equipment.

Here's a look at the capital intensity, which directly feeds supplier power:

• The actual capital expenditure (CAPEX) for the nine-month period ending September 30, 2025 (9M25), excluding rights of use, stood at 15.1% of consolidated revenues.
• To put this in perspective, over the last six years, Telecom Argentina S.A. has poured approximately US$6.5 billion into network modernization and development.
• During 9M25 alone, the company added over 350 new 5G sites operating in the 3.5 GHz band, all requiring equipment from these global vendors.

The cost structure heavily favors the suppliers because the necessary technological equipment purchases are denominated in U.S. dollars. Given the persistent volatility and devaluation risk inherent in the Argentine peso, this dollar-denominated spending creates a significant, unhedged cost exposure for Telecom Argentina S.A. You see this pressure reflected in the financial results; for example, the nine-month period ended September 30, 2025, included a higher loss from exchange rate differences in financial results, partly due to the peso depreciation of 33.7% against the U.S. dollar during that period. That's a direct hit to the bottom line that suppliers don't have to worry about.

Furthermore, the financial obligations taken on to fund growth-including the acquisition of Telefónica Móviles Argentina (TMA)-have increased the power of creditors, which often translates to tighter covenants that can restrict operational flexibility, indirectly benefiting suppliers who are paid on strict terms. As of September 30, 2025, the consolidated Net Financial Debt reached P$4,433,988 million. This level represented a real-terms increase of approximately 44.3% compared to the end of 2024, measured in constant currency. That debt load means the company has less free cash flow to negotiate better pricing with its equipment providers.

To summarize the supplier leverage points:

Honestly, when you need specialized, dollar-priced gear to roll out the next generation of service, you pay the price the supplier sets. Finance: draft a sensitivity analysis on a 10% increase in key vendor contract costs by next Tuesday.

Telecom Argentina S.A. (TEO) - Porter's Five Forces: Bargaining power of customers

When you look at the customer power in the Argentine telecom space, you see a tug-of-war. On one side, the market is still structured around a few big names, which generally keeps buyer power in check. On the other, the severe economic reality in Argentina puts a strong leash on what Telecom Argentina S.A. (TEO) can charge.

The market structure itself suggests medium-to-high power because, even after the major acquisition activity in early 2025, you still have the key players: Telecom Argentina S.A., América Móvil (Claro), and Telefonica de Argentina (Movistar). To be fair, the announced acquisition of Telefónica raised alarms, with government officials noting the combined entity could control around 70% of the country's fixed and mobile services. However, the state suspended the effects of that deal, meaning the competitive friction remains a real factor for customers shopping around.

The biggest check on Telecom Argentina S.A.'s pricing flexibility, though, is the consumer's wallet. Argentina is dealing with persistent, high inflation; year-over-year inflation reached 31.8% through September 30, 2025. Honestly, when the local currency is under that kind of pressure, customers are extremely sensitive to price hikes, forcing operators to be cautious about passing on costs. That economic backdrop definitely limits how much pricing power Telecom Argentina S.A. can exert.

Still, we see signs of customer stickiness, which is a positive for TEO's operational stability. Churn rates, which measure how many customers leave, are not spiraling out of control, especially in the crucial broadband segment. This suggests that once a customer is onboarded, the service quality or contract lock-in is sufficient to retain them for a period.

Here is a quick look at the latest churn figures from the 9M25 report:

The focus on higher-value customers is also evident in the mobile base composition. Moving customers to postpaid plans is a key quality metric because those subscribers typically generate more stable, higher revenue per user (ARPU) than prepaid users. Telecom Argentina S.A. is succeeding here, which means customers are willing to commit to more structured plans.

The shift in customer quality is clear when you look at the postpaid segment growth for the acquired entity, Telefónica Móviles Argentina (TMA), which is now consolidated into the results:

• Mobile postpaid base grew by 4.0% year-over-year in 9M25.
• Postpaid accesses represented 50% of total mobile accesses for TMA as of September 30, 2025.
• For Telecom (excluding TMA) in Argentina, total mobile accesses saw a slight decrease of 5.0%, but this was due to disconnections of lines with no traffic, not high-value customer loss.
• Fixed broadband accesses for Telecom (excluding TMA) grew by 2.5%, adding 102 thousand accesses in 9M25.

So, while the macro environment gives customers leverage on price, the competitive structure and the success in migrating users to postpaid contracts give Telecom Argentina S.A. some insulation against aggressive switching behavior. Finance: draft the Q4 2025 ARPU forecast sensitivity to a 5-point drop in consumer confidence by next Tuesday.

Telecom Argentina S.A. (TEO) - Porter's Five Forces: Competitive rivalry

You're looking at a market where the competitive rivalry is definitely high, and that's the first thing that jumps out when you analyze the Argentine telecom space. Honestly, the market is structured as an oligopoly, meaning a few large, integrated players control the lion's share of the business. Before the big move, the key names were Telecom Argentina S.A., América Móvil's Claro, and Telefónica de Argentina (Movistar).

The acquisition of Telefónica Móviles Argentina (TMA) by Telecom Argentina S.A. on February 24, 2025, for $1.245 billion immediately reshaped that dynamic. This move was about scale, plain and simple. The inclusion of TMA's results meant consolidated revenues for the nine-month period ending September 30, 2025 (9M25) increased by nearly 50% year-over-year, driven by the seven months of TMA contribution. However, this consolidation immediately triggered regulatory scrutiny because the government warned this operation could leave approximately 70% of the country's telecommunications services under a single economic group, raising monopoly concerns. That level of concentration intensifies the pressure on the remaining major rival, Claro.

The financial results clearly show the impact of this intense environment, compounded by macroeconomic volatility. For the nine months ended September 30, 2025, Telecom Argentina reported a consolidated net loss of P$272,543 million. To put that into perspective against the prior year, you see a massive swing from a net income of P$1,254,213 million in 9M24. While revenue growth was strong including TMA, this net loss underscores the severe price pressure and the impact of real-term exchange rate differences, which were the primary driver of the loss.

Here's a quick look at the financial shift following the integration:

The rivalry isn't just about current subscribers; it's a capital-intensive battle for future capacity across all service lines. You see this fight playing out across mobile, fixed broadband, and Pay TV segments. Telecom Argentina's strategy, post-acquisition, is clearly aimed at outpacing rivals in next-generation infrastructure, which demands heavy, ongoing investment. The rivalry requires constant, aggressive spending:

• Accelerate the rollout and capillarity of fiber optics (FTTH).
• Intensify the deployment of 5G mobile sites throughout Argentina.
• Maintain service revenue growth relative to inflation in key areas.

If onboarding takes 14+ days, churn risk rises, so service quality and speed become key differentiators in this tight contest. Finance: draft 13-week cash view by Friday.

Telecom Argentina S.A. (TEO) - Porter's Five Forces: Threat of substitutes

You're looking at the landscape where every minute a customer spends on a competitor's app is a minute they aren't using Telecom Argentina S.A.'s core voice or SMS services. This threat from Over-The-Top (OTT) applications is significant because the underlying infrastructure-mobile data-is already widely adopted. In Argentina, as of January 2025, there were 41.2 million internet users, equating to 90.1 percent of the total population. This high penetration means the barrier to entry for using substitutes like OTT messaging and voice apps is practically zero for the majority of the market. While specific revenue erosion figures from voice/messaging are not detailed in the latest reports, the sheer volume of mobile connections-64.7 million active connections in early 2025-is the base that OTT services are effectively monetizing through data consumption instead of traditional carrier fees.

The substitution pressure is very clear in the video entertainment space. Traditional Pay TV is directly challenged by streaming platforms, which 85.5% of households in Argentina now subscribe to. This trend is forcing Telecom Argentina S.A. to adapt its own offering. You see this push in their Flow Flex product, which is fully digital and requires no set-top box or installation. As of the first half of 2025, Flow unique customers reached almost 1,500,000, an 11% increase year-over-year, with Flow Flex accounting for around 6% of the total Pay TV subscriber base. This internal shift shows the company is actively competing within the substitute category, trying to capture the value before it fully migrates away from traditional bundles. Cord-cutting has accentuated losses on the pay-TV side.

Fintech services present a major substitution threat to traditional banking, and Telecom Argentina S.A. is fighting back with Personal Pay. As of June 2024, Personal Pay had onboarded more than 2,900,000 clients, positioning it as the second-largest participant in terms of remunerated account balances at that time. This is a direct play to capture financial transaction revenue that might otherwise go to established banks or other digital wallets. The growth rate was substantial; by June 2024, the total payment volume for Personal Pay had multiplied by 61 times compared to June 2023 figures.

We must also watch the nascent, but structurally important, threat from alternative low-cost connectivity. Satellite internet, primarily driven by Starlink, is expanding, especially in areas where terrestrial network deployment is costly. As of June 2025, satellite internet accesses in Argentina hit 217,812. To put that into perspective, this figure represents only 1.78% of the total fixed internet accesses, which stood at 12.3 million accesses by the end of the first half of 2025. Starlink is estimated to control around 90-95% of this specific satellite market segment. While small now, this segment targets areas where Telecom Argentina S.A.'s fixed infrastructure is weakest, making it a strategic, albeit currently minor, substitute for high-speed broadband access in remote geographies.

Here is a quick look at the scale of the substitution pressures:

The key takeaways on substitutes for Telecom Argentina S.A. are:

• OTT apps erode traditional voice/messaging revenue base.
• 85.5% of households use streaming, pressuring Pay TV.
• Flow Flex is at 6% of Pay TV base as a direct response.
• Personal Pay has over 2.9 million clients fighting for fintech share.
• Satellite broadband is nascent at 1.78% of fixed internet.

Finance: review the Q4 2025 ARPU trends for Pay TV versus mobile data revenue growth by next Tuesday.

Telecom Argentina S.A. (TEO) - Porter's Five Forces: Threat of new entrants

The threat of new entrants for Telecom Argentina S.A. remains low, primarily due to the massive financial and structural barriers to entry in the Argentine telecommunications sector.

Low, due to extremely high capital expenditure (CAPEX) required for network infrastructure.

Building a competitive network requires substantial upfront investment. Telecom Argentina has invested more than US$6 billion in infrastructure expansion and modernization since 2017. For the 2025 fiscal year, the company intends to invest around 18% of its revenues. The projected CAPEX for 2025, including the US$1.245 billion acquisition of Telefónica Argentina, could reach US$2 billion. Even excluding the acquisition, the company estimated its 2025 capital expenditures to be approximately P$946,963 million. In Q1 2025, consolidated CAPEX (excluding rights-of-use additions) represented 13.0% of consolidated revenues.

Significant regulatory hurdles exist, requiring licenses from bodies like ENACOM and CNDC.

Entry requires navigating complex compliance. ENACOM (Ente Nacional de Comunicaciones) is the National Communications Entity overseeing the sector. Any new entrant must secure mandatory ENACOM certification for telecommunications equipment, with total costs generally starting in the range of several thousand US Dollars. Furthermore, major transactions face intense scrutiny from the CNDC (Comisión Nacional de Defensa de la Competencia). For instance, the attempted acquisition of Telefónica Móviles Argentina S.A. (TMA) by Telecom Argentina S.A. for US$1.245 billion was suspended following a CNDC recommendation due to concerns over market concentration. The government noted this merger could result in market share of 61% in mobile and 69% in fixed lines.

High barriers of scale and scope, as Telecom Argentina offers a quad-play of services.

Telecom Argentina S.A. operates with significant scale across multiple service lines. As of December 31, 2024, the company reported:

• Mobile subscribers in Argentina: 21.6 million
• Fixed broadband connections: 4 million
• Cable TV subscribers: 3.2 million
• Fixed telephony lines (IP): approximately 1.86 million

The company offers a quad-play bundle of services, which requires established infrastructure across all these verticals to compete effectively.

The market is in a consolidation phase, demonstrated by the TMA acquisition, not expansion.

The most significant recent market event points toward consolidation rather than new entry. Telecom Argentina completed the acquisition of 86,460,983,849 ordinary shares of Telefónica Móviles Argentina S.A. (TMA) on February 24, 2025, for US$1.245 billion. This move, which aimed to accelerate 5G and fiber optics rollout, highlights that established players are absorbing competitors rather than the market opening up to new, large-scale entrants. This trend aligns with broader turbulence in the Latin American telecom market favoring consolidation.

Finance: draft 13-week cash view by Friday.