TI looks to increase stake in Telecom Argentina

6 Aug 2010

Telecom Italia (TI) is to seek approval from the Argentine government to raise its stake in Sofora, the holding company that controls local fixed line incumbent Telecom Argentina, from its current 50%. According to news agency Reuters, the move follows an agreement reached yesterday between TI and Grupo Werthein – the company that holds the remaining 50% in Sofora – which ends all disputes between the partners and would allow TI to comply with local anti-trust rules. ‘They have expressed the intention to increase their stake and they are going to bring this up… in an application to the government,’ commented Adrian Werthein, a director of the Werthein Group, adding: ‘This is an issue that will be decided if they have a chance to increase [their stake]. But I do not think it is going to be a problem.’ Mr Werthein said that the size of the stakes under the deal had not yet been decided.

According to TeleGeography’s GlobalComms Database, following a two-year investigation Argentina’s National Commission for the Defense of Competition (CNDC) ruled in August 2009 that TI’s indirect stake in Telecom Argentina violated antitrust legislation and ordered the company to sell its 50% shareholding. The CNDC ruled that TI’s stake caused cross-ownership issues as Spanish telecom group Telefonica, which acquired a 24.7% stake in TI through the Telco consortium in October 2007, already owns Argentina’s other fixed line operator Telefonica de Argentina. TI immediately launched an appeal against the decision, which ordered it to sell the stake by 25 August 2010, and in January 2010 an appeals court halted the CNDC’s sale order. Six months later the court also cancelled a decision that restricted TI from exercising rights in its local unit and annulled a resolution which suspended rights to exercise and sell a call option on its 50% stake in Sofora.

Argentina, Telecom Argentina (incl. Cablevision), Telecom Italia (TIM)