Seeking Alpha

Telecom Argentina soars; is Telecom Italia planning to sell its stake?

  • Shares of Telecom Argentina (TEO +8.1%) are up sharply, even though no news has hit the wires.
  • 54.7% of TEO shares are owned by Nortel Inversora (NTL +7.6%), itself 68% owned by Telecom Italia (TI) and 32% owned by the Werthein Group. (20-F)
  • One possible reason for today's jump is the potential of a sale by Telecom Italia of its 37.2% indirect stake in TEO, as the Italian giant contends with the threat of a credit downgrade. The beleaguered telco recently ruled out floating a stock offering as a means to pare its onerous €28.8B net debt load, and has nixed a number of other strategic alternatives.
Comments (5)
  • terry_oldberg
    , contributor
    Comments (2) | Send Message
     
    Under the law of supply and demand, if Telecom Italia sells its stake, the increase in the supply of stock for sale sends the price downward but it is going upward!
    13 Aug 2013, 01:41 PM Reply Like
  • gdimitrov
    , contributor
    Comments (11) | Send Message
     
    Telecom Italia's stake is not currently floated to the public. If a transaction were to occur, there is no reason why the stake would necessarily enter the float and add to the number of shares outstanding; rather, it seems more probable that the shares would continue to stay off exchanges.

     

    Also, if TI is indeed considering sale of its stake, the market may be perceiving a transaction as a net positive for TEO - having a more financially viable owner of 1/3 of the company would be a positive.
    13 Aug 2013, 02:08 PM Reply Like
  • terry_oldberg
    , contributor
    Comments (2) | Send Message
     
    The results of the just completed election in Argentina are a big plus for TEO and may account for today's run up in the price of the stock. In the election the ruling Peronist party of Cristina Fernandez took only 26% of the vote. With Fernandez and her party in power, holders of shares in TEO bear the risks of nationalization without fair compensation and inability of the company to pay dividends to holders of ADRs due to currency restrictions. Absent these risks, the shares this debt free, highly profitable and fast growing company are much more valuable.
    13 Aug 2013, 04:07 PM Reply Like
  • gazoky3
    , contributor
    Comments (35) | Send Message
     
    Remember what happened to the spanish Repsol in that house in the prairie
    13 Aug 2013, 05:20 PM Reply Like
  • gdimitrov
    , contributor
    Comments (11) | Send Message
     
    Definitely a strong candidate for the move.
    13 Aug 2013, 09:36 PM Reply Like
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