Bloomberg News

Argentina Asks Telefonica Details on Telecom Stake

January 09, 2009

The Argentine Competition Commission seeking to prevent a monopoly in the country’s telecommunications market, ordered Spain’s Telefonica SA and its partners to provide documents on their stake in Telecom Italia SpA. (TIT)

Telefonica, among Telecom Italia’s controlling shareholders, also runs Telefonica de Argentina SA, the country’s biggest phone company. Telecom Italia reiterated last month plans to exercise an option to increase its stake in Sofora Telecomunicaciones SA, the holding company of No. 2 phone provider Telecom Argentina (TECO2) SA.

“This is an operation that under Argentina’s law should have been sent to this commission for approval,” Ricardo Napolitani, the agency’s head, said in a news conference in Buenos Aires. “We will investigate on what ways the interests of clients will be affected and if there is a dominant or monopolistic position.”

Telefonica SA (TEF) and partners Assicurazioni Generali SpA, Intesa Sanpaolo SpA, Mediobanca SpA and the Benetton family agreed in April 2007 to acquire a controlling stake in Telecom Italia for 4.1 billion euros ($5.51 billion).

The group created the holding company Telco SpA to control Milan-based Telecom. Telefonica bought 42 percent of Telco, which held 23.6 percent of Telecom Italia.

“The commission considered that the operation in which Telefonica SA took control or a substantial influence in Telecom Italia has an impact in Argentina because those two companies are the main telephone operators in the country,” the commission said in a statement today in Buenos Aires.

In December, the commission ordered Telecom Italia to not exercise the option to raise its stake in Sofora until the regulator issues a final decision.

Napolitani said a timeframe hasn’t been set for a ruling as the commission is waiting to receive the documents.

Telecom Argentina fell 20 centavos, or 3.1 percent, to 6.2 pesos at 3 p.m. New York time on the Buenos Aires Stock Exchange, the biggest decline in almost three weeks.

To contact the reporters on this story: Eliana Raszewski in Buenos Aires eraszewski@bloomberg.net

To contact the editor responsible for this story: Jonathan Thaw at jthaw@bloomberg.net


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