Telecom Italia faces further Argentina sale delay amid rumours of Trujillo bid plans

Telecom Italia said on Friday it is to discuss a proposal from Fintech to extend an agreement to sell the Italian operator's controlling stake in Telecom Argentina to the investment company.

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Telecom Italia CEO Marco Patuano

Fintech is understood to have made its proposal in an effort to save the deal, after it became apparent that regulators in Argentina had still not cleared the sale of the 22.7 per cent stake. Regulatory approval has been delayed twice, and it had been hoped that clearance would be received by Sept. 25.

At the same time, Reuters reported that investor group Asati challenged the sale of the Telecom Argentina stake ahead of the meeting on Friday, saying that Telecom Italia should maintain its holding.

Reuters noted that Telecom Italia agreed to sell the stake to Fintech for $960 million almost a year ago. The move forms part of the Italian operator's plan to reduce debt and improve its general financial position to support future network investments. Quoting unnamed sources from Argentina's competition watchdog, Reuters said the regulator had not yet decided whether to approve the deal.

Earlier in September, Telecom Italia CEO Marco Patuano said further significant delay could cause the deal to collapse.

Meanwhile Telecom Italia also faces further takeover speculation after reports emerged this week that Sol Trujillo, the former CEO of Australian operator Telstra as well as Orange, was seeking to raise up to €7.5 billion ($9.6 billion) to bid for a stake in the operator. Citing unnamed sources, Bloomberg said Trujillo has discussed the plan with U.S.-based financial advisers, while sovereign wealth funds in the Middle East are also understood to be interested.

According to Bloomberg, Trujillo's plan is dubbed Project Adriano, and would also see the former telecoms executive installed as CEO of the Italian operator. Reuters quoted junior minister Antonello Giacomelli as saying he was not aware of any such plan.

In general, Telecom Italia has not had it easy of late: for example, efforts to buy Brazil-based broadband provider GVT failed after Vivendi agreed to sell the unit to Spanish rival Telefónica.

Last week, Telefónica agreed to acquire GVT for just over €7 billion in cash and stocks, following three weeks of exclusive negotiations. As part of the deal, Vivendi will receive 7.4 per cent of Telefónica Brasil shares, and 5.7 per cent of Telecom Italia shares.

The GVT decision leaves Telecom Italia in a precarious position on the Brazilian market following widespread reports that local operator Oi is eyeing an acquisition of Telecom Italia's local business TIM Brasil. The Italian incumbent, along with Telefónica, is keen to shore up its position in Brazil, which has become a key driver of earnings growth amid stagnation in the two operators' domestic European markets.

Telecom Italia now has debts of around €32 billion and is under pressure to improve its financial standing after its credit rating was reduced to junk status last year. Patuano has previously outlined a €4 billion plan to help the company cut debt and improve its domestic network assets.

For more:
- see this Reuters article
- see this separate Reuters article
- see this Bloomberg article
- see this separate Bloomberg article

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