24 April 2009

Telecom Italia Considers Leaving Argentina

23 04 2009 - Gabriele Galateri di Genola, chairman of Telecom Italia, confirmed yesterday to Reuters in Naples (Italy) that Telecom Italia is considering selling its share in Sofora and leave Argentina, among a number of other options. The declaration comes after Argentina's National Commission for the Defence of Competition (CNDC) rejected this week its appeal over the ruling that bans board members, managers, and representatives from making any decision or giving out instructions that could involve the exercise of "political rights" in Telecom Argentina—CNDC resolution 44/09.

Significance: On 3 April, the CNDC issued a ruling that stripped Telecom Italia directors' voting powers in Telecom Argentina and forced the directors of Telecom Argentina and related companies to revoke all decisions made by the board of directors after 9 January, when the commission announced a formal investigation into Telefónica's indirect 1.8% stake in the local operator. This participation can be indirectly traced via a complex hierarchy of shareholdings—Spanish giant Telefónica currently holds 10% of Telecom Italia, which also at the same time owns a 50% stake in Sofora S.A., an investment consortium that controls Telecom Argentina. The Spanish giant also has 98% in competing operator Telefónica Argentina. The investigation request came after Telecom Italia announced its plans to exercise an option to buy 48% held by the Werthein Group in Sofora. The suspension of this operation was confirmed in late January.

Source: Communications Direct

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