TI to sell part of Argentine unit, awaits regulatory approval for remainder

27 Oct 2014

Telecom Italia (TI) has accepted an offer from investment firm Fintech Group to amend and restate their original existing agreement regarding the sale of the Italian company’s entire interest in Telecom Argentina. Last November TI agreed to sell its Argentine unit to Mexican billionaire David Martinez’s Fintech for USD960 million, but the telco has been forced to extend the deadline for completion of the sale as it awaits regulatory approval from antitrust authorities in Argentina. Under the amended agreement, the sale of TI’s 51% controlling interest in Sofora – the holding company that controls Telecom Argentina – is conditional upon receiving regulatory approval from the Secretaria de Comunicaciones (SeCom), which is expected to take place ‘within the next two and a half years’. In the interim, a 17% minority interest in Sofora will be sold to Fintech by the end of this month.

The total aggregate consideration of the transaction remains unchanged at USD960 million, of which USD113.7 million has already been received by TI, while USD215.7 million will be paid for the 17% stake in Sofora by the end of October. A further USD550.6 million will be paid as consideration for the sale of TI’s 51% controlling interest in Sofora, with the remaining USD80 million to be paid following closing of the transaction, pursuant to additional agreements related to the sale. If the sale of 51% of Sofora to Fintech is not completed within two and a half years, TI may then elect to either terminate the agreement with Fintech and receive a six-month call option to purchase the 17% minority interest in Sofora previously sold to Fintech pursuant to an agreed formulation, or sell its 51% stake in the holding company to a third party purchaser, subject to regulatory approval. In this case, Fintech has agreed to guarantee that TI will receive an overall amount of at least USD630.6 million.

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