Colombia EPM,ETB Try To Lure Telefonica Moviles As Partner"

BOGOTA -(Dow Jones)- Public utility company Empresas Publicas de Medellin, or EPM, and telecommunications firm Empresa de Telecomunicaciones de Bogota, or ETB, joined forces in a bid to lure Spain's Telefonica Moviles (TEM) as a strategic international partner in the telephone business, the companies confirmed Tuesday.

The move came just a day after the Colombian government said it chose Mexico's Telefonos de Mexico (TMX), or Telmex, to help state-owned telecom firm, Colombia Telecomunicaciones, break into the mobile business. The deal is said to be worth $3 billion.

Spanish telecom giant, Telefonica SA (TEF), which owns a 91% stake in Telefonica Moviles, was also bidding to take over the management of Colombia Telecomunicaciones.

General managers of EPM and ETB met late Monday in Medellin with Sergio Regueros, president of Telefonica Moviles' Colombian operations, to discuss the alliance. Spokeswomen at all three companies, EPM, ETB and Telefonica Moviles' Colombian unit confirmed the meeting.

Juan Felipe Gaviria, general manager of EPM, said the telecom companies are moving quickly to counter fierce competition with the arrival of Telmex in the country.

"It's evident that a new international operator would like to join forces with the second and the third most important telephone companies, which are EPM and ETB, now that a possible alliance between (Colombia) Telecom and Telmex is approaching," EPM's Gaviria told Caracol radio in an interview.

Telefonica Moviles already operates in this Andean nation through its subsidiary Movistar, the second largest mobile company in Colombia. It had 4.75 million mobile subscribers in the country at the end of June.

EPM's spokeswoman told Dow Jones Newswires that the international partner wouldn't only strengthen EPM's and ETB's mobile business, but also boost their Internet services among other things.

EPM and ETB already control Colombia Movil, also known as Ola, with a 50% stake each. But the relatively new wireless firm, with users totaling 1.3 million at the end of 2004, has faced many problems as it doesn't have the capabilities to handle that many subscribers.

Colombia Movil has been fined on several occasions by the Industry and Trade Superintendency for faulty billing practices and other problems. Shareholders, which resisted capitalizing the firm, recently said they will inject 400 billion pesos ($1=COP2,301.00) of fresh capital to upgrade the company's technology.

-By Diana Delgado; Dow Jones Newswires; 571-600-1980; colombia@dowjones.com

(END) Dow Jones Newswires"

Posted to the site on 23rd August 2005