Grupo Werthein Would Consider Buying TI's Stake in TEO

Argentine investment group Grupo Werthein, the second largest shareholder in fixed line operator Telecom Argentina, would consider acquiring Telecom Italia's stake in TEO if TI agrees to sell it, local daily Infobae reported Gerardo Werthein, VP of TEO and Grupo Werthein's representative, as saying.

However, TI said it is not considering selling the company's stake at TEO, local daily El Cronista reported a source close to TI as saying.

TEO is controlled by a company called Sofora by virtue of the latter's 83% stake in Nortel Inversora, the holding company that owns 54.7% of TEO. TI owns 50% of Sofora, while 48% of shares are controlled by Grupo Werthein and the remaining 2% by France Telecom.

TI has an opportunity to take full control of TEO and its mobile unit Telecom Personal in 2009, by exercising a call option for Grupo Werthein's shares in Sofora. According to the press report, TI is planning to exercise that option.

Emiliano Wachs, an analyst with investment bank Grupo SBS, believes Grupo Werthein is concerned about TI gaining full control of TEO and is trying to distract attention from that.

In August, Gerardo Werthein issued a statement voicing his concern that Spain's Telefonica could influence decision making of TEO as a result of Telefonica buying into TEO's parent company.

That led to local antimonopoly commission CNDC beginning a study of Telefonica's potential impact on the Argentine telco.

TEO's board was quick to respond and downplay Werthein's claims in a note to the Buenos Aires stock exchange, saying the TEF/TI deal would not interfere in the operator's structure.

"I believe Grupo Werthein is trying to confuse matters. The issue regarding monopoly of the market and the call option are separate things," Wachs told BNamericas.

According to the analyst, Grupo Werthein fears it will be pushed out of TEO if TI executes its call option. "Grupo Werthein is fighting for their interests. So if Telecom Italia wants to execute the call option, Grupo Werthein will want to increase the price of its stake," Wachs said.

Wachs also believes TI is likely to want to increase its stake in Telecom Argentina. "It is impossible to think that Telecom [Italia] will want to sell its stake [in Telecom Argentina] as the mobile business in emerging markets is growing," he said.

"Telecom Italia has control of the situation. The only other possible scenario is if the antimonopoly commission creates obstacles to the Telefonica/TI operation," Wachs said referring to the possibility that CNDC decides Telefonica's influence in TI would be excessive.

Posted to the site on 7th September 2007