Telecom Italia Settles Shareholder Dispute over Telecom Argentina
Published on: 9th Aug 2010
Note -- this news article is more than a year old.
Telecom Italia is seeking permission from the Argentinean government to increase its stake in Telecom Argentina after reaching a deal that settles the long running dispute with the Werthein Group. The Werthein Group (48%) and Telecom Italia (50%) control a holding company Sofora Telecomunicaciones which in turn controls Telecom Argentina. The remaining 2% stake is held by France Telecom.
The move is a sharp reverse on events earlier this year, when the Argentinean Competition Authority ruled that Telecom Italia had to sell its stake in Sofora to the Werthein Group. The Competition Authority felt that Telefonica's indirect holding in Telecom Italia meant that the Spanish firm had stakes in two mobile networks. Telecom Italia always argued that Telefonica's indirect minority stake had no impact on its operations.
Late last week, it was reported that Telecom Italia had reached a deal with The Werthein Group that ended all disputes between the partners.
"They have expressed the intention to increase their stake and they are going to bring this up ... in an application to the government," Adrian Werthein, a director of the Werthein Group, told Reuters in a telephone interview. The agreement between the partners would allow Telecom Italia to comply with local anti-trust rules, he said.
It has been suggested that Telecom Italia is aiming for a 58% stake in Sofora and will retain its option to buy out the remaining stake in 2013. In exchange it will drop its ongoing battle to enforce the 2009 put option that would have allowed it to buy out the company with immediate effect.
However, gaining permission from the government may prove problematic as it has expended significant political capital to block such a deal in the past. Earlier this year, the government also threatened to nationalise Telecom Argentina if it lost an appeal over a court ruling forcing Telecom Italia to sell its stake and withdraw from the market.
Sofora owns an 83% stake in Nortel Inversora, the holding company that owns 54.7% of Telecom Argentina. The other shareholders in Telecom Argentina are the company employees, with 4.7%, and the free float, which accounts for 40.6%.
On the web: Reuters