Q-1: Mr. Masjoan, it is now more than 10 years ago, that ENTEL was privatized and Telefonica Argentina and Telecom started to operate. What is your resume of this period?
A-1: There was a significant change in the telecommunication infrastructure of Argentina. That is the best way to describe what had happened in the last ten years. These changes modified the quality of the service and also the customer’s satisfactions. Just to give you an idea, ten years ago the only service available was the basic phone services. Only the 13% of the network was digital. Apart from that, the 35% of the installed lines were able to perform direct international calls with our operating assistance. The customers had to wait for four years to install a new telephone line and 40 days if they wanted to repair their telephone line. The cellular phones were just arriving into the market. There were approximately 25.000 cellular users. The exact number of installed telephone lines in Argentina was 3 million. Today, 100% of the network is digital. The number of telephone lines rose to 9 million. There are more than 60 million cellular users. Argentina has a very modern telecommunication infrastructure. Today, the customers that want to install a new telephone line have to wait less than a month and only a day to repair it.
Q-2: The 9th of November 2000 is a date that changed the telecommunication market in Argentina. Are you satisfied with the performance of the sector since then?
A-2: The 9thof November 2000 was not the Big Bang. The data and Internet services had been always deregulated. The cellular phone service had two operators in Argentina by the year 1993. In 1996, another two operators began to provide this service in the rest of the country. After November 2000, four operators entered into the market. This was an historical date for the telecommunication market because it was established that there were no restrictions for the operations in Argentina. The companies do not have to pay for licenses. There are no restrictions for capital ownership. The consequences are quite positive.
Q-3: Are you satisfied with the regulatory framework or do you expect some changes concerning legal issues or the regulation of the interconnection rates?
A-3: Not even in the United States the interconnection rates are fully deregulated. The long distance calls and data services are regulated. If you want to make an international call in the States, you have to apply for your local telephone company. These companies have regulated rates that are higher than the usual fares for long distance calls. There are some restrictions for the capital ownership in the United States.
Q-4: How far would you say that the entrance of new competitors in November 2000 did affect your operations?
A-4: Of course that the entrance of new competitors affected our operations in Argentina. First of all, the prices went down and this happened in the middle of a recession. So, the volume of benefits in terms of products came down significantly. They introduced the real costs of the market. Telecom was worried about its income and its recovery in the middle of a recession.
Q-5: Mr. Masjoan, what is - this time - true, concerning the rumors about changes in the structure of the company?
A-5: I cannot deny that one of our partners said that they would like to buy Telecom Argentina but the other associate does not want to sell.
Q-6: Does the competition of Telecom Italy and France Telecom in Europe have a negative impact on your operations in Argentina, as those speculations are surely a result of the situation in Europe?
A-6: I do not know. Argentina is not Europe. Maybe there are lots of speculations. Nobody knows about the end of the history of telecommunications. There are significant pressures on the benefits because of the deregulation. The introduction of IT technology in the network requires more margins to recover from the investment. The companies are suffering for the first time from the qualifications established by Standard & Poor´s and Moodys. I assume that in ten years from now maybe there will be new players in the market. So, what is happening today will not change the history of an industry that is a hundred years old.
Q-7: Taking now a closer look on Argentina again, what are the different services that Telecom provides?
A-7: We divided the operations into two business units: one enterprise business unit which deals with large, medium and small accounts and the mass market unit which deals with individuals in data and telephone services. Then, we have the Internet unit for the Internet services. We produce the yellow pages. Telecom Personal is also part of the company and provides cellular phone services. We have solutions for small and medium size companies. We want to provide all the services that the customer needs. If we cannot create and develop the service, we make contact with somebody else that can do it.
| Q-8: What is the level of your customer’s satisfaction in comparison to other services provided by your competitors?
A-8: You have to consider that 30% of our customers normally make long distance calls. Apart from that, there are close to 1,7 million long distance customers that changed their operators. Some of them come back to Telecom. The best way to measure the customer’s satisfaction is the success of our company. Telecom is the best telephone operator in Argentina and has 31% of the market share. We are also the most important Internet service provider with over 250.000 subscribers. This represents the 20% of the Internet market. So I think that they are satisfied with the service.
Q-9: Which are the segments with more potential of growth? The data transmission services?
A-9: Yes, the data transmission services represent an 8% of the telecommunication market. It is a very small market with a huge potential of development.
Q-10: Can Argentina become the leading Latin American country on the field of Internet services?
A-10: I hope so. The results of a research gave us the idea six months ago that half of the Latin American Internet sites were in Argentina.
Q-11: A few days ago, the Internet division was separated from the Secretariat of Science and Technology and is now part of the Secretariat of Communications. Do you think that this was a right decision?
A-11: Yes that is a good decision. The natural integration between the telecommunications and the Information Technology industry had been forecasted for decades. The first time I heard about it was twenty-five years ago. It is not a new idea that there was going to be a merger between the telecommunication and the information technology industry.
Q-12: Telecom signed a few days ago a strategic alliance with IBM, establishing a technological interchange between both companies. Do you want to reveal some more details on this matter?
A-12: As you know, the telecommunication and the information technology industries are mixed up. The Web hosting and the data services are a proof of that. Telecom has a data center. We are also associated with an IT equipment provider to enter to the developed markets.
Q-14: Mr. Masjoan, what are your personal and professional objectives for the next two or three years and what do you expect for the near future of Argentina?
A-14: My personal objectives are related to spend more time with myself. I like to play golf. I play golf during vacation time. I will never be a good golf player, if I do not play it more frequently. I also wish to spend more time with my wife and my grandchildren. I am very proud of what we have done in the company.
Q-15: Are you announcing right now a personal change within Telecom.?
A-15: No, no, I will continue of course. There is still a lot to do. We changed the infrastructure of the telecommunication sector. Telecom made telephone lines available for the people. We were successful in managing a big company. For instance, every city with more than 5.000 habitants has a telephone network and cellular phone coverage. We are providing a good quality of service all over the country. We also supply telephone lines in places were there is not electricity. About Argentina I would like to say that the problem of our country is not based on the economy. This question needs significant changes in its structure. Most countries in the world are in bankrupt but the capital markets and their habitants ignore it. This is not the case of Argentina. The cost of changing the old system is almost the price of the national deficit that is more than 5 billion dollars. Now is time to solve it. Then, Argentina will be one of the best countries in the world. On the other hand, Argentina has a dual currency system. The dollar became stronger in the last two years and our currency too. The international prices for commodities fall down. They represent a significant portion of the GDP. Argentina was able to recover from lots of crisis in the past and I do not see why the country would not be able to solve it now.
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