Telecom Italia (TI) is to sell one of its core businesses to an investment firm led by a Mexican billionaire for €714 million.

The sale of Telecom Argentina business is part of the Italy-based operator's strategy to raise €4 billion to revive its business and avoid a credit downgrade.

David Martinez's Fintech Group will buy TI's 22.7 percent indirect stake in Telecom Argentina SA for about €640 million.

The operator will get a further payment in the region of €74 million for agreements related to the deal with the group, such as an agreement for TI to continuing providing technical support and other services to Telecom Argentina for the next three years.

Meanwhile, the investment firm is also buying into Telecom Italia International, Sofora Telecomunicaciones, Tierra Argentea and Nortel Inversora, parts of the Telecom Italia group that also have shares in Telecom Argentina.

Earlier this month, TI chairman Aldo Minucci oversaw a meeting of the company's board of directors held to consider the sale process of the Milan-based group's holdings in Telecom Argentina.

The meeting came after Moody's Investors Service cut the group's rating to junk in October. However, TI says that it does not expect its sale of Telecom Argentina to have a significant impact on its consolidated net debt.

Along with Italy and Brazil, Argentina has been one of Telecom Italia's three core markets. Last year the market accounted for around 13% of the phone company's revenue.

In the first nine months of 2013, TI's Argentine unit reported revenues of €2.9 billion and an EBITDA margin of 27.9 percent.

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