Telecom Italia (TI) has unveiled measures to reduce the weight of its debts, including asset disposals led by the sale of its stake in Telecom Argentina.
The Italian incumbent intends to raise about €4 billion ($5.4 billion) from the asset sales.
It has approved the issuing of mandatory convertible bonds worth €1.3 billion towards this target.
Telecom Italia received an offer for its 22.7 per cent stake in incumbent Telecom Argentina and the board has voted in favour of accepting it.
The Argentine operator is the country’s third-largest operator with 19.6 million mobile connections (GSMA Intelligence, Q3, 2013).
The bidder for the Telecom Agentina stake was not identified but media reports said it was Fintech, an investment firm led by Mexican billionaire David Martinez which is already a shareholder in the incumbent.
No value was placed on the sale but the market value is approximately $1.4 billion.
The disposal of the Argentine stake is one of the measures approved by Telecom Italia’s board in order to support its 2014-16 industrial plan.
Other asset disposals are also on the cards. Telecom Italia is interested in the sale and leaseback of its cellular towers in Italy and Brazil, as well as the TI Media digital TV business. Together the two sales could raise in the region of €2 billion.
However, there was no news about the previously mooted disposal of TIM Partecipacoes in Brazil, which is thought to be favoured by Telefonica. In fact, TI said investment in Brazil between 2014 and 2016 would be BRL11 billion ($4.76 billion).
The situation in Argentina had raised competition concerns. The country’s antitrust regulator has previously said it will study the situation following the recent stakebuilding by Telefonica in Telecom Italia.
The Spanish operator controls leading operator Telefonica de Argentina while Telecom Italia exercises indirect control over rival Telecom Argentina.
However, TI’s industrial plan also envisages €9 billion investment domestically, including €900 million on mobile networks, as well as debt-reduction measures. By the end of 2016, the aim is for 80 per cent of the population will have access to LTE.
Telecom Italia’s adjusted net debt was €28.2 billion at the end of September and its aim is to reduce it to less than €27 billion by the end of 2013.
The operator also announced that third-quarter profit fell about 27 percent to €505 million, which missed analyst estimates.