Argentina Rejects Fintech's Bid to Buy Telecom Italia Unit

  • Regulators rejected deal in unanimous decision by board
  • Telecom Italia says it has `wide time margin, guarantees'

Argentine regulators rejected a bid by Mexican financier David Martinez to buy a controlling stake in Telecom Argentina SA from Telecom Italia SpA, arguing that his Fintech Group isn’t qualified to run a telecommunications business in the South American nation.

The Aftic regulator unanimously rejected the proposal for Fintech to buy a 68 percent holding in Sofora Telecomunicaciones, the company Telecom Italia uses to control Telecom Argentina. Fintech, an investment fund, couldn’t guarantee the normal functioning of a telecommunications company, according to the regulator.

“Fintech Telecom LLC was incorporated in Delaware less than a month before Telecom Italia accepted the bid,” Aftic said in its statement on Thursday. “It lacks expertise and qualifications to run the company.”

Telecom Italia struck the deal in November 2013 on the Argentine sale. After failing to win regulatory approval, Telecom Italia agreed in October 2014 to give Martinez 30 months to complete the purchase, at the same time transferring a 17 percent holding in Sofora to Fintech. The original deal was valued at about $960 million.

Martinez and a local representative of Fintech in Argentina didn’t reply to calls and e-mails seeking comment. In a statement, Telecom Italia said it has "wide time margin and guarantees" in the deal. If the sale of a controlling stake in Sofora to Fintech cannot be completed by April 29, 2017, Telecom Italia can seek another buyer, it said.

Telecom Argentina is one of the divestments sought by Telecom Italia Chief Executive Officer Marco Patuano in his strategic plan to cut debt and to restore the carrier’s investment grade. More recently, Telecom Italia is working with Deutsche Bank AG to sell its 1.6 billion-euro ($1.8 billion) stake in wireless-tower unit Inwit SpA, people familiar with the matter said last week. Telecom Italia had almost 27 billion euros in net debt at the end of June. French media company Vivendi SA this year became its largest shareholder.

Telecom Italia shares traded 0.5 percent higher at 1.06 euros as of 9:04 a.m. in Milan.

Martinez, 58, helped restructure corporate debt after Argentina’s 2001 economic crisis and currently owns a minority stake in Argentine cable television operator Cablevision SA as well as interests in the energy industry. He has also filed briefs in support of the Argentine government’s position in a battle with holdout creditors.

Before it's here, it's on the Bloomberg Terminal.