Verizon Communications Inc. said its Argentine wireless unit defaulted on $1 billion of debt after the country's devaluation slashed revenue.
Verizon also cut its stake in the unit, called CTI Holdings, to 48% from 65% by giving 5.5 million shares to employees in a move to reduce exposure to Argentina. The reduction allows Verizon to exclude CTI from its financial statements.
The default underscores the financial difficulties facing companies in Argentina and how their foreign owners, such as Verizon, are unwilling to support their Argentine units after the nation's $95-billion default and devaluation.
CTI hired investment bank Houlihan Lokey Howard & Zukin to negotiate with creditors. The debt includes $263 million of senior notes due 2008, plus loans and vendor financing, analysts said. Verizon is liable for about 10% of CTI's $1-billion debt. The local currency has lost about 65% since January.