Telmex is negotiating with Telecom Italia on entrance in the controlling partnership of Telecom Argentina, incumbent north of the country. Mexican sources told Convergencialatina Telmex “is pointing to Telecom”. Representatives of the Italian business sector asserted the version has real grounds. Negotiations are being conducted with Italian top entrepreneurs.

Last week, Telecom got creditors¿ consensus for 87% of its debt. Average discounts reach 10%, and there would be payments in cash for almost US$ 700 million. Thus, the operator controlled by Telecom de Italia and Werthein Group outdid the 66% requested by Argentine legislation to reach an out-of-court settlement agreement, and leave behind default, ongoing since June 2002, the biggest of an Argentine private firm ever. Debt in “default” reaches some US$ 2.7 billion.

Once reorganization was struck, the firm lost its appeal for acquisition. In fact, early this month, America Movil¿s stock experienced drops in the Mexican Stock, given versions on the purchase of Telecom Argentina. However, Telmex was the one showing interest in negotiations. Carlos Slim¿s firm acknowledges the difficulties of buying Telecom, but persists in its intentions. The Argentine operator was the first interest of Telmex within Telecom Italia. From 2000 to date, Mexican executives has obtained several reports on the feasibility of the acquisition; the one most recently checked was requested to a well-known German bank, setting a strategy to split fixed and mobile businesses.

That point, fixed and mobile spin-off is turning negotiations more complicated: Telecom Italia has no intention to leave mobile operations. Besides, the stakes of the Italian group in firms is indirect and on controlling firms, rather than on business units.

In his visit to Argentina in mid-May, Carlos Slim, main holder of Telmex and America Movil, made repeated reference to Telecom Argentina. The entrepreneur pointed at the time “we are seriously considering Argentina, and we have to check all possibilities here to expand operations. Entrance could take place through commercial alliances, acquisitions or investments in infrastructure”. But when asked if they were considering fixed assets, his playful answer was: “only Telefonica and Telecom are here”.

Last week, versions had it Italian assets were for sale in Chile, and even an offer came out for 50% of Entel Bolivia.

In that sense, it may be about a sale in block. Telecom Italia holds stakes in fixed operators in Argentina (Telecom de Argentina), Brazil (Brasil Telecom), Chile (Entel Chile) and Bolivia (Entel Bolivia).

To date, the sole concrete offer has taken place in Bolivia. There, Federación de Cooperativas Telefónicas (Fecotel) offered US$ 113 million to buy 50% of the shares of Entel in Telecom Italia. The proposal also includes cash flow available; therefore, the final offer may reach US$ 275 million. The figure –as published by the local paper Los Tiempos- sounds out of proportion, as the total value of the operator may reach US$ 225 million, and the remaining 50% of shares is held by the State. Entel Bolivia offers fixed telephony –mainly long distance – and cell services, in addition to data and Internet.

The proposal was heard on Wednesday from he Chairman of Fecotel, Ricardo Pérez Jordán; the Preisdent and VP of the Administration Board of Cooperativa de Teléfonos de La Paz (Cotel), Pierre Chain; and of Cooperativa de Telecomunicaciones de Santa Cruz (Cotas), Luis Oreste.

In Chile, Telecom Italia asserted having received no offers from Telmex, thus answering a document sent by the Stock Superintendence (SVS). The company informed it had received no offers, nor entered negotiations to sell its stake in Entel.

The Superintendence requested info from Entel for the strong hike registered in its stock, 6.7% up between Wednesday and Thursday, and high volume of transactions made, some US$ 9.8 million, followed by that of Telefonica CTC, which traded US$ 3.9 million.

As from May, the Chilean market has been speculating on the operation. Then, just as now, controllers of Entel informed the Superintendence they were holding no negotiations with Telmex.