Telefónica faces a difficult decision in Brazil after authorities there told the Spanish operator to sell assets in the country due to its growing influence over Telecom Italia, while a key shareholder in Telecom Italia said it opposed an enforced sale of TIM Brasil.
Telecom Italia said it agreed to sell its entire controlling stake in Telecom Argentina to the Fintech Group for a total price of $960 million (€712 million), confirming previous reports that it had received an offer from the investment company owned by Mexican financier David Martinez.
After months of disruption and speculation about its future strategy, Telecom Italia finally unveiled a new plan that will see the Italian operator invest €3.4 billion ($4.5 billion) in next-generation networks, cloud computing and LTE and raise funds of around €4 billion through the sale of its Argentina unit and other assets and the issue of up to €1.3 billion in mandatory convertible bonds.
Telefónica's CEO and Chairman Cesar Alierta gave assurances in Italy that he will avoid job cuts and maintain network investments at the struggling Italian operator as the Spanish group gradually increases control over Telecom Italia.
Moody's on Wednesday said it has downgraded Telecom Italia's credit ratings by one notch to Ba1 from Ba3, realising the fears of former CEO Franco Bernabe by classifying the Italian operator's bonds as "junk".
As was widely anticipated, Telecom Italia Chairman and CEO Franco Bernabe handed in his resignation at the start of a board meeting that had been scheduled to determine the future business strategy of the troubled operator.
The months of tortuous negotiations at Telecom Italia appear to have finally taken their toll on the operator's CEO, Franco Bernabe, who is reportedly considering resigning at a board meeting due to take place on Oct. 3.
Telefónica's plan to increase its hold over Telecom Italia has already encountered a hurdle after directors of the Italian incumbent as well as Italian politicians voiced concerns that the Spanish operator would seek to sell valuable assets of Telecom Italia once it had gained control
Telecom Italia CEO Franco Bernabe and core shareholders met after all on Thursday despite saying earlier that they had postponed talks until October, but a deal on the future ownership of the debt-laden Italian operator remains elusive.
The chatter around the future shareholder structure of Telecom Italia reached fever pitch this week, as rumours suggested core domestic shareholders in the Italian operator recently rejected an €800 million ($1.07 billion) offer from Telefónica to buy part of their stakes in the Telco partnership, which holds a blocking minority of 22.4 per cent in Telecom Italia.