Telecom Italia has launched an appeal against a ruling by Argentina's anti-monopoly commission which the operator claims amounts to the "confiscation" of its stake in Argentina's second biggest telephone company, the Financial Times reports.
The National Commission for the Defence of Competition (CNDC) ruled to block directors of the Italian operator from exercising voting rights in Telecom Argentina, although Telecom Italia owns 50% of the company that controls Telecom Argentina.
Werthein, a private group that is close to the government of Cristina Fernández, has 48%, the FT adds.
Telecom Argentina is the country's biggest telecoms company after Telefónica de Argentina, the local subsidiary of Spain's Telefónica, wherein lies the rub. Telefónica bought a 23.6% stake in Telecom Italia in 2007. The CNDC's ruling is part of an investigation into whether Telefonica's involvement in the two biggest operators in Argentina constitutes a monopoly.
Telecom Italia is struggling with some €34 billion net debt and this set-back in Argentina could become a serious headache for beleagured CEO Franco Bernabè.
Telecom Italia has two directors on the six member board of Telecom Argentina, plus one named in conjunction with Werthein, the FT says.
Telecom Italia insists that Telefónica has no say in decisions about Telecom Argentina.
It also says Werthein had planned to leave the company "irrevocably and unconditionally" by early 2009 and that Telecom Italia had the option to buy its stake.
However, the CNDC froze that option in January without explanation.
Many commentators think the leftist government would like to take back control of a key utility.
Last year President Fernández's government took control of private pension funds, giving the state pension body a 22% stake in Telecom Italia and right to name a director at a shareholders' meeting on April 28.
Telecom Italia said the CNDC's ruling violated constitutional protection of shareholders' rights, overstepped its legal functions and had been taken by just two of the commission's five members, the FT reports.