Argentina’s telecoms regulator on Thursday announced that it will not authorise the sale of Telecom Italia’s stake in Telecom Argentina on the grounds that the buyer, Fintech, lacks the experience to manage the company.
Telecom Italia’s response gave little away. On Friday the Italian incumbent issued a statement acknowledging the regulator’s decision, reminding the industry that it has brokered plenty of time into the sale agreement to allow for regulatory hurdles, and noting that Fintech plans to appeal the ruling.
Argentina’s Autoridad Federal de las Tecnologías de la Información y las Comunicaciones (AFTIC) said its board had unanimously agreed to block the sale of 68% of Sofora Telecomunicaciones, Telecom Argentina’s holding company, to Fintech.
In its decision, it pointed out that Fintech was incorporated in the U.S. state of Delaware on 18 October 2013, less than a month before Telecom Italia acc epted its offer for Telecom Argentina.
"The board ruled that [Fintech] is not in a position to operate and manage the services and infrastructure of Telecom Argentina," AFTIC said in a statement. "Fintech has not shown the experience or the expertise."
Had it approved the deal, control of Telecom Argentina would have been left solely in the hands of investment companies, it added.
Telecom Italia originally agreed to sell its majority stake in Sofora, plus shares held by various Telecom Italia subsidiaries, to Fintech for US$960 million in November 2013, but was forced to delay closure of the deal a number of times for regulatory reasons.
Almost a year later it brokered a new deal with Fintech, retaining the $960 million price tag, but this time building in extra time to enable the companies to gain regulatory approvals.
Under the new deal it sold a 17% stake in Sofora to Fintech in late October 2014 for $215.7 million. The remaining 51% stake, which carries a price tag of $550.6 million, is contingent on receiving the approval of AFTIC.
The companies have up to two and a half years from October last year – i.e. 18 months from now – to obtain AFTIC’s consent. Should they fail in that endeavour, Telecom Italia will have the right to buy back the initial 17% stake via a call option, or sell its 51% stake to another buyer.
Telecom Italia reminded the market of this timeframe on Friday.
"[The] contract provides for ample time and guarantees regarding completion of the sale of the stake in Telecom Argentina," it said.
"Telecom Italia acknowledges the decision taken by the Argentinean telecommunications regulator AFTIC to deny authorisation of the sale of Telecom Italia’s controlling interest in Telecom Argentina," it added. "The purchaser, Fintech, has indicated to Telecom Italia that it plans to appe al [the] decision."
