Thursday, July 6, 2017

Cablevisión and Telecom Argentina plan merger

Cablevisión Holding,  a spin off company formed through the corporate restructuring of Buenos Aires-based Grupo Clarín, announced that its subsidiary Cablevisión, the leading pay TV and broadband provider in Argentina, and Telecom Argentina, a major mobile and fixed telecom company in Argentina, plan to merge their corporate and operational structures to establish a converged telecom operator.

The transaction is intended to create a major telco in Argentina as well as to better enable the companies to participate in the opening up of the telecom sector in the country, which under the regulatory framework is scheduled to begin as of January 2018.

The companies stated that on June 30th the boards of both companies approved a preliminary merger agreement (compromiso previo de fusión), with the proposed transaction designed to align with the wider industry convergence in the provision of fixed and mobile, video and Internet services to enable quad-play offerings. The combination is also expected to enhance the companies' ability to invest in the latest mobile technology and to deploy a high speed fibre network.

Under the terms of the agreement, Telecom Argentina will implement a merger by absorption of Cablevisión. As a result, Telecom Argentina will increase its share capital by $1,184,528,406, and therefore will issue on the effective date of the merger $1,184,528,406 shares of common stock, each to be registered with a nominal value of $1, hold one vote, and be issued either as a class A share or a new class of common stock (class D shares), which will be distributed Cablevisión shareholders in accordance with the agreed exchange ratio.

The exchange ratio approved by the companies' boards provides for 9,871.07005 shares of Telecom Argentina for each Cablevision share. Thus, CVH, the controlling shareholder of Cablevision, and Fintech Media, Cablevision's minority shareholder, will receive a total direct and indirect interest in Telecom Argentina equal to 55% after its capital increase. The current shareholders of Telecom Argentina will retain the remaining 45% of the share capital following the merger.

The transaction is subject to the respective shareholder meetings' approval and to regulatory approvals.

As well as being the main pay TV and a major broadband service provider in Argentina, Cablevision is also the second largest pay TV provider in Uruguay. Telecom Argentina is a leading mobile and fixed service provider in Argentina and also a major mobile carrier in Paraguay.


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