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Date: Tue, 7 Jul 98 17:09:34 CDT
From: rich@pencil.math.missouri.edu (Rich Winkel)
Organization: PACH
Subject: CENTRAL AMERICA: Fire Sale of Telephone Companies
Article: 38547
To: undisclosed-recipients:;
Message-ID: <bulk.23176.19980708181544@chumbly.math.missouri.edu>

/** ips.english: 475.0 **/
** Topic: ECONOMY/CENTRAL AMERICA: New Owners Sought for Telephone Companies **
** Written 3:38 PM Jul 6, 1998 by newsdesk in cdp:ips.english **
Copyright 1998 InterPress Service, all rights reserved.
Worldwide distribution via the APC networks.

New Owners Sought for Telephone Companies

By Maricel Sequeira, IPS, 3 July 1998

SAN JOSE, Jul 3 (IPS) - El Salvador, Honduras and Guatemala began an international search of buyers for their telephone companies, adding to an oversupplied market where 25 state-owned companies are for sale, with only 10 prospect buyers on sight.

In the race, the small Central-American networks might be less attractive to buyers than Brazil's state giant Telebras, which goes on sale on July 25, regional experts coincide.

Even so, El Salvador hopes to have success on July 17, when it sells its cellular telephone, INTEL. Then on the 24, it will sell CTE/Antel, the regular telephone company. Together, the two companies have a base price of 550 million dollars.

Juan Jose Daboub, president of CTE/Antel, said that the date was chosen so that all qualified buyers could participate.

Nevertheless, he believes that only three or four companies will bid, precisely because of the skewed relationship between the supply and the demand. Daboub fears that the sale of Telebras will delay the Salvadoran sale and for that reason, it was scheduled before the sale of the Brazilian firm, he said.

Eight international companies are qualified to bid: France Telecom (France), Bell South, Southwestern, GTE and Motorola (United States), Telia (Sweden), Telmex (Mexico) and Telefonica de Espana (Spain).

Honduras and Guatemala have also programmed the sale of their telecommunications companies, Hondutel and Telgua, for this year. In the case of Telgua, of Guatemala, it will be the second attempt. The first - which took place in December - failed when there was only one offer, by Telefonos de Mexico, which was far below the base price set by the government.

Honduras has only privatized its airport services and the billing and meter reading services of the electric company.

Roberto Micheletti, general manager of Hondutel, said that the sale of the company will take place at the end of this year, and assured that there have already been some contacts with several consortia in Europe and the United States.

The base price is about 600 million dollars and the government will only sell 49 percent of the shares, Micheletti said

Honduras has the lowest percentage of telephones per capita in Central America, with 2.5 for every 100 inhabitants. El Salvador has a similar situation, which means that are practically unexploited as markets.

At the end of June the Nicaraguan legislature approved the privatisation of the most profitable companies of the public sector. Those are the telephone, electricity and potable water companies, and one of the state banks.

The privatization laws, approved only in general terms, are part of the conditions imposed by the International Monetary Fund in the structural adjustment programs that Nicaragua put in place in April.

Nicaragua will sell more than 40 percent of its shares in the telephone company to a transnational company, as well as 51 percent of shares in the Nicaraguan Bank for Industry and Commerce, which until March had active shares of 165 million dollars and passive shares for 155 million.

Regarding the potable water company, the Nicaraguan government will give up its monopoly to private agents, after a process of bidding, and will do the same for the electric company. After that, the only pending sale will be that of the Nicaraguan oil concern.

The biggest privatization wave in Nicaragua occurred during the government of Violeta Chamorro (1990-1996), when more than 300 enterprises were sold to entrepreneurs, workers and former members of the army and the rebel forces, as a form of compensation for their participation in the civil war, sales or transfers.

The largest company in Central America, according to the magazine America Economia, is the Costa Rican Institute of Electricity, which also handles telecommunications and which remains in the hands of the government.

In Costa Rica, the privatization of public companies is an extremely sensitive issue, although it will be broached in an upcoming debate which will take place later his month and which will include the participation of several sectors.

The most successful country in the region in this respect has been Panama, which managed to sell seven companies for almost 850 million dollars. The highest price was obtained by the telephone company, sold to the British Cable and Wireless for 652 million dollars.

Guatemala, El Salvador, Nicaragua and Panama have sold all their public enterprises. Honduras has not, but is beginning the process. Costa Rica hasn't either, but still has to make a decision in that respect.

In all the countries, several formulas are used to transfer firms to the private sector, like the simple sale of shares or concession.

The first company that was granted in concession by the Guatemalan government was the railroad, last April, when Congress approved a use contract with Compania Desarrolladora Ferroviaria.

Guatemala also signed a contract with the Canadian International Post Service, which will take over the management of the Post Office within a period of six months.

The list of companies that remain to be sold is headed by Telgua, followed by the Guatemalan Electric Company and the National Institute of Electrification.

The government of president Alvaro Arzu also expects to transfer the administration of Guatemalan ports to private hands, as well as roads, airports and the driver's licensing registry.

Alfredo Guzman, general manager of Telgua, said that if the sale of that company is not completed this year, it will be more difficult in 1999, because it is an election year.

Guzman said that among the companies interested in Telgua are Deutsche Telecom (Germany), Telefonica de Espana (Spain), GTE and Telefonos de Mexico. Two local firms, Telered and Luca, have also acquired the guidelines for participation in the bid.

[c] 1998, InterPress Third World News Agency (IPS)
All rights reserved

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