The fine by Argentina comes just days after President Cristina Fernandez de Kirchner seized control of domestic energy company YPF from Spain’s Repsol. Julio De Vido, the Argentine planning minister, said on Tuesday that the penalty against Telefonica, which owns O2 in the UK, was intended to be a warning to other telecoms providers that service interruptions will not be tolerated. He added: “Cellphone service quality has declined in recent months. We need to have full service, not service that gets worse when you walk a few metres one way or another.” Telefonica’s subsidiary Movistar controls about 40pc of Argentina’s mobile phone market. However, around 18m customers were left without phone and data services for a few hours last month because of technical problems. Mr De Vido said Movistar must compensate clients $41.6m for the loss of service and pay a $1.3m fine. Telefonica is Spain’s second biggest company behind Santander, the banking group, and the ruling threatens to exacerbate already tense relations between Argentina and Spain.
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