Telecom Italia Wins Court Ruling - Gets Access to Argentinian Subsidiary

A court in Argentina has ruled that the country's anti-trust body, the CNDC was wrong to block Telecom Italia from participating in board meetings held by its local subsidiary, Telecom Argentina. The CNDC had originally blocked Telecom Italia from the board meetings as Telefonica holds a minority shareholding in the Italian firm. Telefonica also owns another Argentinean telecoms operator, Telefonica Argentina.

"The judicial decision clearly expresses that the CNDC resolution affects the rights of Telecom Italia as well as confirming Telecom Italia's position that the CNDC does not have the authority to resolve as it did," read a statement from Telecom Italia's Argentinean office.

Telecom Italia had argued that Telefonica's indirect holding in Telecom Argentina was so small as to be negligible. Telefónica has also formally stated in a note to the Buenos Aires stock exchange that it would not be able to influence decision making of the board of Telecom Argentina.

Telecom Italia owns a 50% stake in Sofora Telecomunicaciones, which in turn owns controlling interest in Telecom Argentina.

Telecom Italia has been in a battle to increase its holding in the company to take control, but has been thwarted by Werthein Group which is the other main shareholder in the company. Allegations have been made that the populist government has sided with the Werthein Group to block foreign investment. Telecom Italia has a put option on the Werthein Group which would force it to sell its stake in Sofora Telecomunicaciones to the Italian firm.

The Argentine government itself owns a 22.8% stake in Telecom Argentina following its take-over of private pension fund investments last year.

Posted to the site on 2nd August 2009