Telecom Italia (TI) has announced it has received approval from Argentina’s antitrust agency, the National Commission for the Defence of Competition (CNDC), to raise its 50% stake in Sofora, the holding company that controls local fixed line incumbent Telecom Argentina. Under a deal announced in August 2010, Grupo Werthein – the local company that owns the other 50% stake in Sofora – has agreed to hand over an 8% stake in the holding company to TI, enabling the Italian company to raise its shareholding to 58%. In return, TI has agreed to drop an ongoing battle to enforce a 2009 put option that would have allowed it to buy out Sofora with immediate effect. The firm will receive a new option to buy out the Werthein group in 2013. TI said the deal will result in a special gain of about EUR250 million (USD351 million) in its fourth-quarter 2010 consolidated results.
The approval follows an investigation by the CNDC which ruled in late August 2009 that TI’s indirect stake in Telecom Argentina violated antitrust legislation and said it would force the Italian firm to sell its holding in Telecom. The government argued that the market became a monopoly after Spain’s Telefonica bought a stake in TI in 2007, as it already owns the country’s other fixed line incumbent Telecom Argentina. However, the CNDC has now approved Telefonica’s acquisition of the 10% stake in TI, clearing the way for the Italian firm to increase its stake in Telecom Argentina. TI said that measures have been agreed upon to ensure there will be no influence or participation on the part of Telefonica in any TI decision-making process concerning its Argentinean subsidiaries. Further, restrictions have been introduced regarding commercial and operational relations between the two groups within the Argentinean market.