LONDON, UK / ACCESSWIRE / July 5, 2017 / Pro-Trader Daily takes a look at the latest corporate events and news making the headlines for Telecom Argentina S.A. (NYSE: TEO), following which we have published a free report that can be viewed by signing up at http://protraderdaily.com/optin/?symbol=TEO. The Company and Cablevisión S.A. announced on July 01, 2017 that both Companies plan to merge their businesses with the goal of becoming a leading player in the telecom sector which is set to open in early 2018. The planned amendments in Argentina's regulations will now allow Companies to offer pay TV services. For immediate access to our complimentary reports, including today's coverage, register for free now at:
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About Both Parties to the Merger
Buenos Aires, Argentina based Telecom Argentina is a leading telecom Company that offers mobile and fixed telecommunications in Argentina and mobile telecommunications in Paraguay. The Company has been serving the needs of its customers for over 25 years. In 2016, Hedge Fund Fintech acquired a 51% stake in Telecom Argentina. According to GSMA Intelligence, Telecom Argentina's Personal brand is the third largest mobile operator in the country with a 31% market share.
Cablevisión started off in 1981 from La Lucila, Province of Buenos Aires, Argentina. It currently provides cable television and Internet services in Argentina, Paraguay, and Uruguay. Media Company Grupo Clarín holds a 60% stake in Cablevisión. It has over 3.5 million TV customers as of March 31, 2017.
Commenting on the merger German Vidal, CEO of Telecom Argentina said:
"We are proud to create the leading Company in convergent solutions that will fulfill the digital life of people and facilitate the digital operations of enterprises and corporations. At the same time, this transaction will allow us to develop a business model that will accelerate the market transformation towards quadruple play."
Details of the transaction
The merger will allow both Companies to offer fixed-line and mobile communications as well as broadband and television programming to its customers. As per the preliminary agreement signed by both Companies, Cablevisión will be absorbed into Telecom Argentina. Telecom Argentina will issue fresh 1.184 billion shares and offer them to Cablevisión's shareholders as consideration for the merger. Each Telecom Argentina share will hold a nominal value of ARS $1 and carry voting rights of one vote per share. The exchange ratio works out to 9,871.07 shares of Telecom Argentina for each share of Cablevisión.
Cablevisión Holding S.A is the majority shareholder along with Fintech Media LLC who is a minority shareholder in Cablevisión. The merger will result in both these entities owning shareholding and voting rights directly or indirectly in Telecom Argentina. Once the transaction is completed, shareholders of Cablevisión will own 55% stake and Telecom Argentina shareholders will own the remaining 45% stake in the merged entity. Interestingly, the majority shareholder in Telecom Argentina is Mexican financier David Martinez Guzman, who also owns 40% stake in Cablevisión through Fintech.
The deal has been approved by both Companies' Boards of Directors and is subject to shareholders' and regulatory approvals as well as other closing conditions.
Benefits of the deal
If the deal is approved, the new merged Company will corner a majority market share of the local broadband market and put immense pressure on its rivals. The merged entity will have a strong presence in each of the quadruple play giving it a dominant position in the convergent telecommunications services market. This is because the other players do not offer all the services and are strong in only one or two of the services giving Telecom Argentina a strong overall presence.
The merged Company plans to invest in the latest mobile technology infrastructure as well as build a high speed fiber optic network. This will enable it to offer the so-called "quadruple play services" to its customers.
In early January 2017, Argentina relaxed its regulations to allow more competition in its telecoms sector so that it could widen internet penetration and attract investments in this sector. The amendment will allow Companies to simultaneously offer cable TV, internet, fixed line, and mobile phone services, which was not allowed before. The merger comes just in time for the opening of the Argentina's regulations on pay services, which would give the merged Company first mover advantage.
Last Close Stock Review
On Monday, July 03, 2017, the stock closed the trading session at $29.46, surging 16.26% from its previous closing price of $25.34. A total volume of 1.30 million shares have exchanged hands, which was higher than the 3-month average volume of 162.25 thousand shares. Telecom Argentina's stock price skyrocketed 29.72% in the last three months, 62.14% in the past six months, and 57.54% in the previous twelve months. Furthermore, since the start of the year, shares of the Company have soared 62.14%. The stock is trading at a PE ratio of 18.80 and has a dividend yield of 2.41%. At Monday's closing price, the stock's net capitalization stands at $2.78 billion.
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