INTERVIEW: Werthein Would Mull Buying Telecom Argentina Stake
BUENOS AIRES -(Dow Jones)- Argentina's Werthein Group would consider buying Telecom Italia 50% stake in Telecom Argentina if the Argentine antitrust agency ruled that the Italian company has to sell it as a result of its deal with Spain's Telefonica, Gerardo Werthein said Tuesday.
"We would consider buying it (Telecom Itali's stake)," Werthein told Dow Jones Newswires in an interview. "But I first would like to see a ruling by Argentina's antitrust agency."
Telecom Italia owns a 50% stake in the Sofora holding company that controls Telecom Argentina. The Werthein Group owns a 48% stake and France Telecom holds the remaining 2% stake.
Gerardo Werthein is president of W Inversiones, the Werthein Group's investment fund that holds the stake in Telecom Argentina. He is also vice president of Telecom Argentina.
His remarks come as Argentina's antitrust agency is investigating how Telefonica's purchase of a 10% stake in Telecom Italia will affect the operations of Telecom Argentina.
"We believe that this transaction can impact the decision making process of Telecom Argentina," Werthein said, reiterating the concerns he already expressed last week in a letter to the Buenso Aires stock exchange.
As part of the deal, Telefonica gained two seats on the Italian company's board of directors, under the condition that it would abstain from decision-making in markets where the two providers overlap: Argentina and Brazil.
"There is evidence that the supposed independence (of Telecom Italia's board from Telefonica) could not be as much ... given that Telefonica and Telecom Italia have committed to create synergies," Werthein said in the letter co-signed by Julio Pedro Naveyera and Esteban Macek, two independent members of Telecom Argentina's board.
He noted that Telefonica is Argentina's biggest telecom operator and Telecom Argentina's major competitor, and that together they would control more than 90% of Argentina's fixed line telecommunication business, as well as about 70% of Argentina Internet business, and 70% of the mobile telecommunication.
Telefonica declined to comment. The Spanish giant has already told the Comision Nacional de Valores, Argentina's market watchdog, that its deal with Telecom Italia won't impact Telecom Argentina.
The deal can't be closed until it is approved by Brazil's telecommunications watchdog, Anatel, whose decision is due on Aug. 30.
In Brazil, Telefonica owns 50% of mobile operator Vivo Participacoes, and controls Sao Paulo fixed-line operator Telesp, while Telecom Italia owns mobile operator TIM Participacoes.
The European Commission already has approved the Telefonica-Telecom Italia tie-up for Europe, agreeing with the operators that Telefonica's entry into Telecom Italia's share capital doesn't amount to taking control.
Call Options At Stake
The Werthein group bought its 48% stake in Telecom Argentina in 2003 from France Telecom, together with a call option to buy France Telecom's remaining 2% stake in the Argentine operator, which can be exercised in January 2008.
"We want to exercise it," Werthein said.
Meanwhile, however, Telecom Italia has a call option to buy Werthein's 48% stake and France Telecom's 2% in December 2008.
"We are not seller, and the exercise of Telecom Italia's call option and its conditions must be approved by market regulators," Werthein said.
He declined to provide the value of these call options.
People close to the situation said that France Telecom sold in 2003 its 48% stake in Telecom Argentina to Werthein for $125 million, but this stake is now worth about $500 million.
"The value of 30% of the 48% stake had been fixed at $99.5 million, while the rest of the stake will be valued according to Telecom Argentina's market price," these people said.
Telecom Italia declined to comment.
In March, Telecom Italia Chairman Carlo Buora had said the company wanted to exercise its call option on Telecom Argentina, to gain control of the company and consolidate it in its account.
Buora also said that the value of Telecom Italia's call option was worth $7 million.
Telecom Argentina's shares in Buenos Aires were last down 2% to ARS16.70 in a negative market.
-By Serena Saitto, Dow Jones Newswires; 5411-4311-3125; serena.saitto@dowjones.com
(END) Dow Jones Newswires
Posted to the site on 28th August 2007
