Telecom Italia Positive on Argentina Probe - Source
BUENOS AIRES -(Dow Jones)- Telecom Italia Chairman Gabriele Galateri and Chief Executive Franco Bernabe are "positive" about the outcome of an investigation by Argentina's antitrust agency into Telecom Argentina, a person familiar with the situation told Dow Jones Newswires on Friday.
The person made the remarks after the executives met with Argentine President Cristina Fernandez and Planning Minister Julio De Vido.
Telecom Italia holds a 50% stake in Sofora SA, the holding company that indirectly controls Telecom Argentina.
The same person said Telecom Argentina will announce "important investments" on March 8, the day after the company is to report its annual results which are expected to show continuing growth. In November, Telecom Argentina said its third quarter net profit more than tripled to 227 million pesos ($71.6 million) compared to the same period a year earlier on growth at its mobile telephony and Internet units.
Neither Telecom Argentina nor Telecom Italia officials were immediately available for comment. A press officer for Argentina's government palace confirmed the meeting took place but declined to provide further detail.
The Telecom Italia executives' visit to Argentina comes as the local antitrust agency is expected to rule by the end of March on the probe it opened last year to determine if the 10% stake that Spain's Telefonica bought in Telecom Italia violates the conditions in which Argentina's Entel telecommunications monopoly was privatized in the 1990s. Through the deal, Telefonica indirectly owns 1.8% of Telecom Argentina, which is its biggest competitor here.
Indeed, this small stake holding may conflict with Entel's privatization law, which created two companies - one operating in the north of the country and the other operating in the south. Those companies in the north and south later became Telecom Argentina and Telefonica de Argentina, respectively, which, under the privatization law, are banned from becoming shareholders in each other.
In late December, the antitrust agency extended its probe into Telecom Argentina by up to two months.
In the worst-case scenario, the Argentine antitrust agency may ask Telefonica and Telecom Italia to sell their shares in Telecom Argentina, while in the best and now more likely scenario the agency might approve the deal on the condition that Telefonica de Argentina and Telecom Argentina continue operating as independent companies, as they have already committed to do.
Telefonica's purchase of the Telecom Italia stake has already been approved by the European Union's antitrust commission and Brazilian authorities.
Telecom Argentina's American Depositary Receipts were trading 1% higher at $20.68, while shares in Buenos Aires were up 0.37% to ARS13.25.
-By Serena Saitto, Dow Jones Newswires; 5411-4311-3125; serena.saitto@dowjones.com
(END) Dow Jones Newswires
Posted to the site on 8th February 2008