Venezuela CANTV Warns Pension Dispute Might Hurt Finances

CARACAS -(Dow Jones)- Venezuela's largest telecommunications company, Compania Anonima Nacional Telefonos de Venezuela, or CANTV, said Wednesday that a Supreme Court decision forcing the company to index its worker's pensions would likely hurt its bottom line.

Company officials are now reviewing the court's decision to determine the extent of the economic impact to the company's finances and might appeal the decision, CANTV officials said in a statement.

"A preliminary evaluation indicates that the decision has a material impact on CANTV's financial condition, including a significant impact on its shareholder's equity," the statement said.

Telecom workers represented by the Venezuelan National Telephone Association of Retirees and Pensioners of CANTV, a union known as FETRAJUPTEL, sued the company eight years ago, demanding an adjustment of the pensions received by retirees.

Venezuela's Supreme Court ruled Tuesday that the worker's pensions of 3,408 members of the union need to be adjusted to reflect the country's new minimum-wage level.

Union representatives couldn't be immediately reached for comment early Wednesday.

The court has reportedly also asked the company to pay former worker's-pension increases taking into account the inflation and devaluation levels since 1999, the El Universal newspaper reported Wednesday.

Last November the court initially rejected the union's suit, but the court's constitutional chamber overruled that decision in January and gave some guidelines for the case to be considered again.

CANTV claims the most recent decision violates the principles laid out by the court early this year.

"CANTV is evaluating the legal alternatives it may have, including the ability to request the review of the decision by the constitutional chamber," of the Supreme Court, according to the company statement.

This year has been a challenging one for the telecom company. Earlier this year, the government of President Hugo Chavez blocked CANTV's bid to acquire Digitel, the country's third-largest telecom operator.

Despite these shortcomings, however, the company has seen earnings climb this year on the back on increased demand for cellular-phone and broadband services.

-By Raul Gallegos, Dow Jones Newswires; 58-212-564-1339; raul.gallegos@dowjones.com

(END) Dow Jones Newswires"

Posted to the site on 27th July 2005