Telecom Italia plans to sell only part of its stake in Telecom Argentina and the rest once it has received regulatory approval for the full sale to Fintech, after agreeing to a request by the New York-based fund to amend the original sale agreement for the unit.
The Italian operator said a 17 per cent minority interest in Sofora--one of the holding companies for the Telecom Argentina assets--will be sold to Fintech during October 2014 for $215.7 million (€170 million). Telecom Italia holds 68 per cent of Sofora, which in turn has a 51 per cent stake in Nortel Inversora, the investment vehicle holding 55 per cent in Telecom Argentina.
Under the terms of the amended agreement with Fintech, the sale of the 51 per cent controlling interest in Sofora for $550.6 million is then conditional upon obtaining regulatory approval from the Secretaría de Comunicaciones--Argentina's telecom regulator--and is expected to take place within the next two-and-a-half years. The Italian operator has already received $113.7 million in payments relating to this deal and said the remaining $80 million will be paid on the closing of the sale of the 51 per cent stake.
Telecom Italia stressed that the total payment for the entire shareholding remains unchanged at the originally agreed $960 million.
Telecom Italia agreed to the offer from the Fintech Group to amend and restate the original existing agreement from Nov. 13, 2013 after the Argentine regulator consistently failed to approve the deal. Fintech made its proposal in September an effort to save the deal.
If a sale is not closed within the two-and-a-half year timeframe, Telecom Italia has the option to terminate the deal with Fintech or seek another buyer.
The sale of the stake in Telecom Argentina forms part of a €4 billion ($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 last year.
In September, Telecom Italia was reported to have debts of around €32 billion.
- see this Telecom Italia statement
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