(Bloomberg) -- Argentina’s President Javier Milei has warned Telefonica SA that his government will review the phone carrier’s plan to sell its local operations to Telecom Argentina SA for a possible breach of anti-monopoly rules.

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Telefonica signed and closed the $1.25 billion deal on Monday after more than three decades in the country, according to a regulatory filing. The Spanish carrier has been working since late 2019 to cut its exposure to Latin America.

Shortly after the filing, Milei’s administration published a statement arguing that the deal stands to put 70% of the country’s telecommunications industry under control of one group. The antitrust review marks the biggest regulatory move to date by Milei, who prides himself on cutting red tape and promoting free markets.

A representative for Telefonica declined to comment.

Telefonica shares rose 1.4% to €4.30 at 10:32 a.m. in Madrid on Tuesday. Telecom Argentina, which had closed 3.2% higher in Buenos Aires on Monday, said it financed the deal with a syndicated loan from Banco Bilbao Vizcaya Argentaria SA, Deutsche Bank AG, Banco Santander SA as well as a bilateral loan from the Industrial and Commercial Bank of China SAU’s local branch.

Milei’s foreign minister, Gerardo Werthein, is part of the Werthein family, whose holding company had competed against Telecom Argentina for the deal, according to a report in local newspaper La Nacion. Gerardo Werthein has stepped back from direct involvement in his family’s investment company.

Telecom Argentina is partly owned by Grupo Clarin, which is also the holding company for one of Argentina’s largest newspapers, Clarin. Milei criticized the paper over the weekend during his trip to Washington for what he called misleading reporting.

Despite broader optimism from corporate executives and Wall Street investors toward Milei’s business-friendly efforts to reform the South American economy, Telefonica’s exit follows a broader wave of multinational companies leaving on his watch, including Exxon Mobil Corp., HSBC Holdings Plc and Mercedes-Benz Group AG.

Outside a spate of energy and mining deals, long-term investments also haven’t materialized, with companies concerned over how the government will change the country’s currency and capital controls.

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Argentina was one of the first two countries Telefonica entered when it started its international expansion in Latin America in the early 1990s, together with Chile. Its arrival marked one of the most iconic deals of Argentina’s wave of privatizations at the time, and Telefonica endured repeated economic crises in the country.

“We think Telefonica pulled off a good transaction,” ING Senior Credit TMT Strategist Jan Frederik Slijkerman said in a note to clients, adding that the price seemed good “given the difficult circumstances in Argentina.”

Telefonica’s Executive Chairman Marc Murtra, appointed by the Spanish government in January, is accelerating a plan to restructure the company. Recently Telefonica sought bankruptcy protection for its Peruvian unit in an attempt to restructure its debt, citing a decades-long dispute with the tax authorities in the filing. According to media reports, the carrier is also looking to sell its operations in Mexico and Uruguay.

Previous Chairman Jose Maria Alvarez Pallete announced in 2019 a plan to drastically lower exposure to Latin America, but struggled to do so. Last year the company made renewed efforts to exit Colombia and disclosed talks with Millicom International Cellular SA to sell the unit for $400 million, but no deal has been announced.

Telefonica will report full-year earnings on Thursday, with Murtra set to take part in his first analyst and media call as chairman of the company.

--With assistance from Clara Hernanz Lizarraga.

(Updates with Telefonica’s share reaction in fourth paragraph.)

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