Venezuela: Winning Bid in Telephone Company Privatization Barbara Khol

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11-19-1991 Venezuela: Winning Bid In Telephone Company Privatization Barbara Khol

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Recommended Citation Khol, Barbara. "Venezuela: Winning Bid In Telephone Company Privatization." (1991). https://digitalrepository.unm.edu/notisur/ 7681

This Article is brought to you for free and open access by the Latin America Digital Beat (LADB) at UNM Digital Repository. It has been accepted for inclusion in NotiSur by an authorized administrator of UNM Digital Repository. For more information, please contact [email protected]. LADB Article Id: 064031 ISSN: 1060-4189 Venezuela: Winning Bid In Telephone Company Privatization by Barbara Khol Category/Department: General Published: Tuesday, November 19, 1991

On Nov. 15, government spokespersons announced that a consortium led by AT&T, GTE and Spain's Telefonica Internacional won the bid for a 40% stake in the state-run Compania Anonima Nacional Telefonos de Venezuela (CANTV). The winner will control 51% of voting rights. Other consortium partners are Venezuelan companies Consorcio Inversionista Mercantil and Electricidad de Caracas. The winning consortium, one of two bidders, offered US$1.885 billion. A US$1.407 billion bid was offered by a consortium consisting of Bell Atlantic International, Bell Canada, Italcable Spa of Italy, Venezuela's Banco Provincial and the Cisneros Organization. The winner has a 35-year concession, with an option to extend for another 20 years. GTE executives estimated the total value of CANTV at US$4.71 billion. The government's base price for the company was set at US$2.146 billion. A recent report in the magazine Business Venezuela said Venezuelans complete fewer than 20% of their international calls and only half of local ones. Under sale contract terms, the winning consortium is committed to investing about US$900 million a year until 2000. The investment includes installation of 300,000 new lines per year until reaching a total 4.5 million. At present, CANTV lines number almost 2 million. Next, 100,000 public telephones are to be installed, and repairs carried out in hours instead of weeks. The consortium is also expected to increase the proportion of completed international calls to 65% within months. The government will retain a 49% stake in the company, and the remaining 11% of stocks are earmarked for company employees. AT&T's sales receipts last year totaled US$36.285 billion, of which US$2.735 billion were profit. Telefonica de Espana obtained US$8.8 billion, with profits of US$781 million. Telefonica's foreign holdings include stakes in two Chilean companies, ENTEL and CTC (30% and 43.7%, respectively), and a seven-year concession in Telefonica de Argentina. CANTV sales receipts in 1990 totaled US$464 million. (Basic data from several reports by Associated Press, 11/14/91, 11/15/91; Agence France-Presse, 11/15/91)

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