Pursuant to the mandate of its Board of Directors, Telecom Italia has accepted during the night the offer of Fintech Group for the acquisition of the entire controlling interest of Telecom Italia Group in Telecom Argentina, held by it and through its subsidiaries Telecom Italia International, Sofora Telecomunicaciones, Nortel Inversora and Tierra Argentea, for an aggregate consideration of USD 960 million.
Of this amount, USD 859.5 million will be paid as consideration for the sale of:
- 68% of the voting shares in Sofora held by Telecom Italia and Telecom Italia International, (USD 750.8 million);
- 15,533,834 Class B shares of Telecom Argentina, representing 1.58% of the outstanding shares, held by Tierra Argentea, (USD 61.2 million);
- 2,351,752 American Depositary Shares, representing 117, 588 Preferred B shares of Nortel, equal to 8% of the Preferred B shares held by Tierra Argentea, (USD 47.5 million);
The remaining USD 100.5 million will be paid pursuant to additional agreements related to the transaction, including an agreement to continue providing the Telecom Argentina companies technical support and other services for up to three years, the waiver by Telecom Italia of certain rights under, as well as amendments to, the current shareholders’ agreement relating to Telecom Argentina with the Werthein Group who will retain 32% of the voting shares of Sofora, and commitment Fintech to pay amounts already reserved for dividends by Telecom Argentina, if such dividends are not declared and paid by the Telecom Argentina Group prior to closing.
Telecom Italia Group has received certain guarantees of performance under the agreements, including the pledge by Fintech of American Depository Shares representing Preferred B shares of Nortel, in a number equivalent to an initial average market value of USD 100 million.
The sale of the Class B shares of Telecom Argentina and the Nortel American Depository Shares held by Tierra Argentea is expected to occur before year end, whilst the sale of the Sofora shares is conditional upon obtaining certain required regulatory approvals.
Fintech has represented its intention to launch, to the extent required by applicable law and just prior to the closing of the sale of the shares of Sofora, a tender offer for the publicly traded shares of Nortel and Telecom Argentina that it will not acquire as described above.
Telecom Italia Group holds an economic interest of 22.72% in the Business Unit Argentina, which reported revenues in 2012 of 22.1 billion Argentine Pesos (Euro 3.8 billion) with an Ebitda margin of 29.6%.
In the first nine months of 2013, the Business Unit Argentina reported revenues of 19.8 billion Argentine Pesos (Euro 2.9 billion) with an Ebitda margin of 27.9% and an Ebit margin of 12.4%.
The net effect on the consolidated net financial debt on the transaction closing date, is not expected to be material, assuming constant exchange rates.
Fintech has expressed the intention to ensure the fulfillment of the investment plans of the Telecom Argentina Group focused on the development of its telecommunications infrastructure and the improvement of the quality of services. Telecom Italia has agreed, in connection with the sale, to provide continuing support to Telecom Argentina, including its know-how in the innovation and technological arena.
Milan, November 14, 2013