Argentina is a very recent entrant to the small group of countries with privately owned telecommunications firms – and, given its history, an unexpected one. Argentina entered this group in November 1990 when the government sold the Empresa Nacional de Telecomunicaciones (ENTeL) to private investors. Although it is too early to definitively assess the impact of this sale, the sequencing of the privatization and the development of a regulatory regime present some interesting issues.

The political situation during the transition from the administration of President Raúl Alfonsín to that of President Carlos Saul Menem in 1989 presented the Menem government with a brief opportunity to introduce radical economic reform. Privatization was a central component of this reform program, and ENTeL was the first company put on the block. The sale became a test of the Menem government's ability and resolve to reform the economy. Rapid completion of the sale was the overriding concern, and development of a regulatory regime initially was neglected.

Regulation plays an important role in the private provision of telecommunications. Portions of the sector are characterized by economies of scale, making an argument for limiting entry in the interests of efficiency. However, inadequate competition can lead to abuses of monopoly power and to demands from customers and suppliers for regulatory protection from these abuses. Standards and interconnection rules affect the efficiency of the sector. High sunk costs and asset specificity make telecommunications firms especially vulnerable to the risks of expropriation.