Argentina's telecoms regulator AFTIC has blocked plans by Telecom Italia to sell its indirect stake in Telecom Argentina to Fintech for a total of $960 million (€846 million), saying the investment firm had demonstrated neither "experience nor expertise" to run the local operator.
Telecom Italia said it acknowledged the decision taken by the regulator, and noted that Fintech had indicated that it planned to appeal against the decision.
Before the start of the process, Telecom Italia held 68 per cent stake of Sofora, which in turn has a 51 per cent stake in Nortel Inversora, the investment vehicle holding 55 per cent in Telecom Argentina.
It signed the original sale agreement with Fintech in November 2013, but was forced to amend the deal after the Argentine regulator consistently failed to approve it. Under the amended terms, Telecom Italia agreed to transfer just 17 per cent of Sofora to Fintech in October 2014, with the remainder to be sold once it had received regulatory approval for the full sale.
If they fail to close the transaction by April 2017, Telecom Italia has a six-month option to buy back the 17 per cent already sold and attempt to sell the remaining 51 per cent to a third party. Fintech had guaranteed that the Italian operator must receive at least $630.6 million for the deal.
If a sale to a different investor is not completed by the end of October 2019, Fintech will have to pay $175 million to Telecom Italia. Telecom Italia will still have six months to buy back the minority stake.
The sale of the stake in Telecom Argentina forms part of a €4 billion ($4.5 billion) plan outlined by CEO Marco Patuano to help the company cut debt and improve its domestic network assets. The operator is under pressure to improve its financial standing after its credit rating was reduced to junk status in 2013. Its net debt stood at €27 billion at the mid-year point.
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