UPDATE 1-Telecom Italia sees Q4 boost from Argentina deal

* Telecom Italia to get 250 mln euro one-off gain in Q4

* Says bigger Argentina stake will boost Q4 earnings

* CEO sees return to overseas expansion – paper

* S&P keeps ratings and outlook unchanged
(Adds S&P note, updates shares)

By Nigel Tutt

MILAN, Oct 14 (BestGrowthStock) – Telecom Italia’s (TLIT.MI: )
earnings will be boosted from the fourth quarter by a bigger
stake in Telecom Argentina (TEO.N: ), booking a one-time 250
million euro gain ($349 million), the phone company said on
Thursday.

The euro zone’s fifth-biggest telecoms group by market value
resumed its overseas expansion with the higher stake in Telecom
Argentina. The Italian company had put foreign expansion on hold
to cut group debt of 33.6 billion euros at the end of June.

On Wednesday, Argentina antitrust investigators cleared
Spanish group Telefonica’s (TEF.MC: ) acquisition of a stake in
Telecom Italia. [ID:nN13281606].

That cleared Telecom Italia to increase its stake in Sofora
Telecomunicaciones SA, which controls Telecom Argentina, to 58
percent from 50 percent.

“The increase in the Sofora stake will not involve any
financial outlay for Telecom Italia and will allow the group to
consolidate the results of Sofora/Telecom Argentina from the
fourth quarter,” Telecom Italia said. [ID:nBIA1445d]

Debt ratings agency Standard & Poor’s said in a note it kept
its ratings and outlook on Telecom Italia unchanged. It cited
Telecom Italia’s lower 16.2 percent indirect stake in Telecom
Argentina and a “low deleveraging ability”.

A revaluation of the Sofora stake to fair market value will
allow Telecom Italia to book a one-off net gain of 250 million
euros in the fourth quarter, the Italian company said.

In the first half of the year, Telecom Argentina had core
earnings of about 400 million euros, Telecom Italia said.

Telecom Italia Chief Executive Franco Bernabe was quoted in
daily La Repubblica as saying that the Argentina move boosts the
Italian group’s overseas activities.

“Without any outlay and without changing our aim of cutting
debt, we are returning to growth overseas,” he said.

Telecom Italia shares were up 1.5 pct at 1.07 euros at 1327
GMT. The STOXX Europe 600 telecoms index (.SXKP: ) was up 0.4
percent.
(Writing by Nigel Tutt and Antonella Ciancio; editing by David
Hulmes and Michael Shields)
($1 = 0.7173 euro)

UPDATE 1-Telecom Italia sees Q4 boost from Argentina deal