(Adds Telecom Italia statement, shares, details)
BUENOS AIRES/MILAN, Oct 16 (Reuters) - Argentina’s telecoms regulator has blocked the sale of Telecom Italia’s local business to investment firm Fintech, halting a $960 million deal that could help the Italian phone group cut its large debt.
Regulator AFTIC said late on Thursday that Fintech was “not in a position to operate and take control” of Telecom Argentina .
“Fintech has demonstrated neither experience nor expertise,” AFTIC said.
Telecom Italia said on Friday that Fintech had indicated it planned to appeal against the decision.
Shares in Telecom Italia shrugged off the news and were up 0.6 percent by 0724 GMT in line with Italy’s blue-chip stock index.
“In our view this represents a slight setback in Telecom Italia’s efforts to sell assets and raise cash in order to reduce debt,” Haitong Research said in a note.
The former Italian telecoms monopoly had 27 billion euros ($30.7 billion) in net debt at mid-year.
Telecom Italia agreed in November 2013 to sell its controlling stake in Telecom Argentina’s holding company Sofora to Fintech, the investment vehicle of Mexican financier David Martinez, for $960 million.
A 17 percent stake in Sofora was transferred to Fintech in October last year for $216 million, while the remaining 51 percent was to be sold after a green light from the regulator.
Under the terms of the accord, Telecom Italia and Fintech have until the end of April 2017 to close the sale.
If they fail to do so, Telecom has a six-month option to buy back the 17 percent already sold and attempt to sell the remaining 51 percent to a third party. Fintech had guaranteed Telecom must pocket at least $630.6 million for the deal.
If a sale to a different investor is not completed by the end of October 2019, Fintech will have to pay Telecom Italia $175 million. Telecom will still have six months to buy back the minority stake.
“Clearly the best option would be the transaction with Fintech as initially agreed,” Haitong said.
“That seems now a tougher scenario to materialize and although we expect Telecom Italia to give Fintech more time to try to convince local authorities over its capacity to acquire the asset, one could not exclude the possibility of TI trying to find other potential bidders for the asset.”
Telecom Italia’s board meets on Friday to discuss possible investments to develop a fibre-optic network. ($1 = 0.8795 euros) (Reporting by Nicolas Misculin and Valentina Za; additional reporting by Jorge Otaola; Editing by Keith Weir)