All-stock deal will see Grupo Clarin-owned cableco take 55% stake in combined company.

Telecom Argentina and Grupo Clarin’s Cablevision unit on Monday announced an all-stock merger in a bid to create a major quad-play provider.

"The companies have considered that their respective operational and technical structures are highly complementary and could be enhanced through structural integration, achieving synergies in the development of convergence products that will bring significant benefits to the customers, the sector and the economy as a whole," said Grupo Clarin, in a stock exchange filing.

The deal gives Telecom Argentina a valuable foothold in the cable TV market, thanks to Cablevision’s 3.5 million TV customers as of the end of March. Cablevision also has 2.2 million cable broadband customers, whereas Telecom Argentina has just 1.7 million ADSL subscribers.

For Cablevision, the deal strengthens its position in the mobile market. At the end of March, Telecom Argentina’s Personal mobile operation had 19.3 million subscribers, accounting for a little under a third of the country’s overall market, according to figures published by regulator ENACOM. Cablevision, which last January acquired the remaining 51% of Nextel Argentina it doesn’t already own – by comparison is a mobile minnow, with just 674,000 postpaid subscribers.

Under the deal, which was agreed on Friday, Telecom Argentina will issue $1.18 billion (€1.04 billion) worth of new shares to Cablevision, giving the latter a 55% stake in the merged entity. Telecom Argentina will retain the remaining 45%.

The merger has been made possible by a change in Argentinian law that permits telcos to offer pay TV services. The reforms are due to take effect from the beginning of next year.

"The combination of both companies will enhance investment in the latest mobile technology infrastructure as well as the deployment of a high-speed fibre optic network," Grupo Clarin said.

The transaction is subject to regulatory approval; Grupo Clarin did not say when it expects to complete the deal.