Roxana M Kahale June 30 2011 Regulator approves provision of audiovisual services via subscription Kahale Abogados | Tech, Data, Telecoms & Media - Argentina Roxana M Kahale Tech, Data, Telecoms & Media IntroductionCorporate informationBusiness planEstablishment of the systemCommunication proposalIntroductionUnder Resolution 432/2011, published on June 27 2011, the federal regulator of communication services (AFSCA) has approved the bid conditions for the granting of licences for individuals and corporate entities for the installation and exploitation of audiovisual services by subscription through a physical link or satellite.The term for the presentation of bids is 120 non-working days (ie, four months) from the date on which the deposit to pay for the bid conditions is made. It may therefore be advisable to review the resolution and its contents before purchasing the bid conditions or otherwise consider purchasing a bid condition under one of the most economical segments.The bid conditions may be purchased at the AFSCA's treasury, with the bid conditions purchase price paid through a cheque or deposit in a special account of the National Bank. The purchase price differs depending on the kind of licence to be applied for: For a licence to connect to customers via physical link, the purchase price is: Ps1,000 for locations with up to 3,000 inhabitants; Ps2,000 for locations ranging from 3,000 inhabitants to 5,000 inhabitants; Ps8,000 for locations ranging from 5,000 to 20,000 inhabitants; Ps15,000 for locations ranging from 20,000 to 50,000 inhabitants; Ps25,000 for locations ranging from 50,000 to 100,000 inhabitants; Ps50,000 for locations ranging from 100,000 to 500,000 inhabitants; Ps75,000 for locations ranging from 500,000 to 2 million inhabitants; and Ps100,000 for locations exceeding 2 million inhabitants. The number of inhabitants should be determined from the result of the last census. For a licence to connect to customers via satellite link, the purchase price is Ps500,000. The presentations must be made through an annexe to the resolution. All documents must be signed by duly appointed representatives, with their signatures notarised and legalised. If the party submitting the bid is a corporation in formation, all shareholders must sign the presentation note or have it signed by their commonly appointed attorney in fact.A bid guarantee of 10% of the amount of the guarantee established is required (ie, 20% of the amount of the investment to be made in installing the system).Corporate informationIndividuals that intend to submit a bid must present information relating to their identity and qualifications to participate in such bid, indicating their patrimonial capacity. For existing corporations, several documents (eg, certified copies of registered bylaws, the shareholders' register and notification of the appointment of directors) must be presented. If the corporation is in the course of being formed, a certified copy of the bylaws signed by all shareholders will suffice. All shareholders must submit information relating to their corporate participation, corporate capital contribution and voting rights.Additionally, the resolution provides that an audited balance sheet for the last two years must be submitted that shows the origin of the funds committed to this project under Section 25(g) of the Media Law. An intermediate balance sheet should be submitted with an audit report or limited review report closed no less than 60 days from the date of submission of the bid, in which the net worth should be at least one-and-a-half times the amount of the investment commitment. Additional details will vary according to the status of the balance sheets presented.A tax registration identification must also be submitted, along with a notarial certificate, including the stock ownership thereof. Additionally, either a fiscal certificate issued by the Argentine Tax Administration or an exemption certificate must be submitted, as applicable. Evidence of a lack of debt with collection societies, with unions and with the AFSCA for taxes or fines must also be provided.Business planBidders must present the total amount that they will commit for the investment and how such capital contributions will be made. The resolution requires the presentation of an itemised plan with values for each job, including: real estate; architectural works; and equipment and operative materials to be used. In cases where third-party infrastructure will be used, the five-year rental cost must be considered. In case of direct-to-home services, the bidder must submit a summary of the value of the costs derived from the use of satellites, links and other services, as well as the cost of the contracted satellite capacity.Such investment must be certified by a competent professional registered with a professional board or the AFSCA. These properties enjoy special status under Section 43 of the Media Law that limits the possibility of their sale or encumbrance without the prior authorisation of the AFSCA.Establishment of the systemThis section sets forth how the networks and cables should be established and which authorisations must be obtained. The bidders must also present a technical proposal on the service to be installed, duly signed by an engineer that meets certain technical board qualifications. The resolution sets forth the points the technical proposal must contain, including: a summary of the project; a list of equipment with its value per item; technical specifications; a description of the signal that such bidder will generate; and any other information that the AFSCA may deem appropriate. Communication proposalThe documents must contain a communication proposal for the description of the signal that such bidder will generate, which provides for all general aspects set out in Section 3 of the Media Law. Such proposal must comply with Sections 65.3(c) and (g) of the Media Law. The documents to be submitted include: a programming grid to be made following the chart set forth in the resolution; a brief description of programming; a chart declaring the origin of the programming (national or foreign); and a description of independent production. The resolution continues to establish that within 15 days of award of the bid, the winner must establish a guarantee of compliance that will be outstanding until the service is approved by the AFSCA under Section 84 of the Media Law. Such guarantee amounts to 20% of the investment to be made.For further information on this topic please contact Roxana Kahale at Kahale Abogados by telephone (+54 11 4116 4155) or email ([email protected]).