Argentine telecom regulator AFTIC has struck again, blocking an agreed transaction just weeks after nixing NII Holding’s sale of Nextel Argentina to Grupo Clarín, nemesis of President Cristina Fernández de Kirchner. This decision, set to be appealed by investor group Fintech, will impact Telecom Italia‘s debt reduction programme, aimed at cutting its €27bn (US$30.7bn) burden.
AFTIC said prospective buyer Fintech is “not in a position to operate and take control” of the local incumbent since it has “demonstrated neither experience nor expertise”.
Telecom Italia said Fintech, a US-based investor, plans to appeal the decision.
In October 2014, Telecom Italia agreed to sell 17% of holdco Sofora to Fintech, and its remaining 51% stake in Sofora within 30 months, for a total US$960m, subject to regulatory approval.
Sofora owns 51% of Nortel Inversora, the investment vehicle holding 55% of Telecom Argentina. Telecom Italia’s original 68% stake in Sofora translated to a 22.7% indirect stake in Telecom Argentina, and its current 51% stake equates to 19.3% ownership.
Fintech paid US$114m for the first part of the sale, and was due to pay US$631m for the remainder.
Under their agreement, Telecom Italia has the right to terminate the agreement if the second part of the deal does not complete within the 30 months, and receive a six-month call option to buy back the original 17% stake or sell the remaining 51% to a new buyer. Fintech also provided Telecom Italia with a US$631m pledge of collateral, meaning that the seller would receive the full price.
In November 2013, Telecom Italia CEO Marco Patuano agreed a plan to reduce the company’s debt, which stands at €27bn (US$30.7bn).
Since then, the company has spun off 40% of its newly created towerco Inwit and said it is open to approaches for the remaining 60%. It is also thought to have explored a potential sale of TIM Brasil, with Oi seen as the most likely partner.
