Govt Issues Decree to Take 47% Stake of Entel

Bolivia's government took a big step toward the takeover of the country's largest telecommunications company on Monday, ordering the transfer of 47% of Entel stock from a public pension fund to state control, local and international press reported.

The Entel stock transferred Monday had belonged to a Bolivian public pension fund administered by Zurich Financial Services and Previsión AFP, a subsidiary of the Spanish bank BBVA.

President Evo Morales has set a May 1 deadline for the nationalization of Entel, Bolivia's former state telephone company, which was privatized in 1995. Telecom Italia holds a controlling 50% stake in the company, while individual private investors own the remaining 3%.

May 1 is the one-year anniversary of Morales' oil and gas nationalization, the first of several moves to exert more state control over the economy.

Meanwhile, the government issued another decree revoking a former ruling that authorized the ministry of economic development to act as a guarantor of investments made by Telecom Italia.

Presidential minister Juan Ramón Quintana said these measures are the first steps towards the nationalization of the telco. TI paid US$610mn for its half of Entel in 1996, during the administration of former president Gonzalo Sánchez de Lozada.

Quintana also said the government continues to negotiate with the Italian operator towards the nationalization of Entel.

According to Juan Gnius, VP of Signals Consulting, once the government has gained control it would shift its focus from technological innovation to concentrate efforts on providing basic coverage to rural areas.

"I think that once the nationalization comes to an end, the government will put the focus on expanding infrastructure and telephony coverage to reach areas where current services do not reach," Gnius told BNamericas.

"I do not think Entel, once controlled by the government will go towards the launch of 3G services. So the nationalization process will allow other operators to become leaders in technological innovation," he added."

Posted to the site on 24th April 2007