Telecom Argentina told Telefonica de Argentina , its primary local competitor, that it could pursue legal action if sanctioned by authorities because of Telefonica of Spain's laying claim to a stake in its Italian owner.

In late October, Telefonica of Spain acquired an indirect 23.6% claim in TEO's controlling shareholder, indirectly giving the Spanish telecom equity a 9.9% stake in its TEF's Italian counterpart. Though TEF has no input in the management decisions of TAR, the acquisition is technically illegal in the eyes of Argentina's telecommunications law.

While discussing TEO's third-quarter earnings today, TEO CEO Valerio Cavallo reported that the company's board sent letters to both TEF and its Argentine unit, as well as local antitrust and communications agencies, clarifying it wasn't a party to the acquisition.

Despite the possibility of legal woes, Telecom Argentina today reached a new annual high in the wake of a better-than-expected third-quarter earnings report. Currently, TEO shares are trading at $24.88, up 13.14 points.