Ericsson began to deliver telecom equipment to Argentina around the turn of the century. Sales soon grew to substantial sums. By 1920, they amounted to SEK 0.7 million, corresponding to two thirds of Ericsson's exports to the entire continent. In the same year, Ericsson acquired an ownership share in a small telephone operating company, Compania Enterriana de Teléfonos S A (CET) that operated in rural areas. In the early 1920s, Ericsson also founded a sales company in Buenos Aires called Compania Sudamerica de Teléfonos L M Ericsson (CSE).
To broaden its business in the area of network operations, Ericsson formed an alliance with Compania Argentina de Teléfonos S A (CAT), a company formed two years earlier. (The two companies continued to operate independently.) At the same time, Ericsson's arch rival, the US company ITT, became the owner of Argentina's largest telephone operator Unión Telefónica. The stage was once again set for a battle between Ericsson and ITT.
The battle had hardly begun when it was called off. The reason was that Ericsson in the early 1930s became entangled in Ivar Kreuger's dealings and had a complicated ownership structure in which ITT was a major owner.
For operations in Argentina, this meant that Ericsson transferred the telephone network in Buenos Aires to ITT. In exchange, the Swedish company received assets that included a telephone network in the city of San Juan.
After this transaction, Unión Telefónica controlled not only Buenos Aires, but also other metropolitan areas. CAT and CET were forced to operate in more rural areas and thus lost subscribers.
In the late 1940s, the Argentinean government took over Unión Telefónica, which had more than ten times as many subscribers as the Ericsson companies. Forced acquisition of CAT and CET was also discussed.
Nationalization plans were finally abandoned in 1960. The Ericsson companies were now able to raise their tariffs and import telecom equipment from Sweden. In the early 1970s, they had 153,000 subscribers, compared with about 45,000 20 years earlier. While this was positive, operation of telephone networks had become a marginal business within Ericsson.
Instead, the focus was on manufacturing at this time. Accordingly, Compania Ericsson (CEA), to which CSE had changed its name in the early 1960s, began to manufacture telephones and electromagnetic switches for the Argentinean market.
Sales were modest, however. Siemens had long held the country in its clutches, and a major breakthrough for Ericsson did not occur until the Argentinean telecom market was deregulated in the 1990s.
Between 1991 and 1995, contracts for delivery of more than 1.5 million lines of AXE were signed, which can be compared with 62,000 lines up until 1991.
At the same time as sales were increasing in Argentina, Ericsson discontinued network operations in the country. CAT was sold in 1992, thus ending Ericsson's days as a telephone operator. CET had been divested in the late 1980s.
The first AMPS mobile telephone system from Ericsson was taken into operation in Buenos Aires in 1993. The following year, Ericsson delivered the first digital mobile telephone network in Argentina based on D-AMPS (now TDMA). Additional orders followed for expansion and modernization of mobile telephone networks. These orders gave CEA a central role in the Argentinean telecom industry.
Ericsson's success in mobile systems is evidenced by the fact that Ericsson at the beginning of the new century had a market share of more than 55 percent in mobile systems, compared with just under 20 percent for fixed networks.
Author: Mats Wickman
