Argentine sale fails to ease Telecom Italia woes
Telecom Italia last week agreed to sell its stake in Telecom Argentina, but still couldn’t avoid a second credit rating downgrade in the space of a few weeks.
The Italian incumbent is selling its 22.72% stake in Telecom Argentina to investment company Fintech Group for $960 million (€711 million), as part of a plan to sell assets to tackle a debt mountain that is leading to the credit ratings downgrades.
Included in the sale are the shares held by Telecom Italia subsidiaries Sofora, Nortel and Tierra Argentea, and Fintech plans to buy up other outstanding shares in the Argentine telco.
However, Telecom Italia concedes the impact of the sale on net debt “is not expected to be material,” meaning it does little to address a drop in confidence by ratings agencies.
Standard & Poors last week followed Moody’s Investors Services in downgrading the firm’s stock, dropping it from BB+ to BBB- with a negative outlook on concerns over the time it will take to see any positive reaction to Telecom Italia’s new strategic direction, Bloomberg reports.
Moody’s last month cut its rating of Telecom Italia over concerns about a weak balance sheet, and uncertainty about its future after chairman and chief executive, Franco Bernabè, resigned and was replaced by Marco Patuano.