Category: Colombia

Spain’s Telefónica has beaten off rival bidder CANTV of Venezuela to win control of Colombia Telecom for $369 million. Telefónica outbid its Venezuelan rival by $17 million to buy 50% plus one share of Colombia’s largest state-owned telephone company, exceeding government expectations of a $350 million sale price. The government is holding on to almost half the company to ensure the privatization does not lead to the creation of a private quasi monopoly as it did in many Latin American countries, most notably Mexico. The sale has thwarted attempts by Mexican entrepreneur Carlos Slim to gain a foothold in Colombia’s telecoms market. Last year a bid by his Telmex of $350 million was rejected by the government as too low. Two weeks ago he bought 29% of CANTV in what was seen as a move to secure control of the Colombian provider. Citicorp advised the government on the privatization.

The minimum bid for a controlling stake in Colombia’s state owned telecommunications company, Telecom, will be $233 million. The government set the price after a valuation by Citicorp. Bidders have until Tuesday to submit their technical offers and join the auction. The government is selling off 50% plus one of the shares in the company and has set a minimum price after calling off a previous sale when the price was too low. Mexico’s Telmex’s bid then valued the company at $350 million. Telmex, Spain’s Telefonica, Venezuela’s CANTV and the consortium Cablecentro-Phone One-Swedtel are expected to take part in the contest.

The Colombian economy expanded 3.74% percent in the fourth quarter of 2005 and 5.13% in the full year. The country benefited from surging consumer demand last year as interest rates fell making it cheaper for people to purchase on credit. A strong currency also held down the cost of imported goods. The Colombian economy under President Alvaro Uribe has picked up in the last two years following several years of very moderate growth. The president has controlled much of the violence that has plagued the country and restored greater order to the economy, helping it to grow and boosting investor confidence.

The Colombian government will set the sale date for the 50 percent plus one share of the state-owned telecom company, Colombia Telecom, for April 7. Citicorp is advising the government on the sale and it expects to receive approximately $350 million from the privatization. Spain’s Telefonica, Mexico’s Telmex and Venezuela’s CANTV are all expected to bid. The government is holding on to almost half the company to ensure the privatization does not lead to the creation of a private quasi monopoly as it did in many Latin American countries, most notably Mexico.

Colombian cement producer, Cementos Argos, part of the conglomerate GEA, is to appeal the decision by a Venezuelan court that last week stripped it of assets in Venezuela. Cementos Argos bought a 39.6% stake in a cement factory in Venezuela, owned by state-owned Cemento Andino, back in 1998. A court has since ruled that Cementos Argos must hand over its shares in the Trujillo plant to the Venezuelan state.

The International Finance Corporation (IFC), part of the World Bank is to invest $60 million in Colombian Banco Davivienda, thereby allowing it to expand its operations in the local market. Colombia, with its pro-US government and improving security, is to be one of the largest beneficiaries of investment into business by the IFC in Latin America. Davivienda, owned by financial group Bolívar, is the country’s fourth-largest financial institution in terms of assets.

Colombia is looking ahead to the privatization of Bogotá’s El Dorado airport, which is due to be on the block later this year, maybe as early as July. The government says that seven companies – from Mexico, China and Spain – have expressed an interest in the sale.

Colombian state-owned microlender Megabanco, due to be sold this week, has attracted six interested parties, according to the government. The companies include Bancolombia (CIB), Banco de Bogotá, Banco Davivienda, Banco Santander, Fundesarrollo and the financial arm of General Electric (GE). The successful bidder will need to offer more than the minimum price of $304.6 million set by the government. Whoever buys Megabanco will be taking on at least $28.9 million of debt belonging to Coopdesarrollo, the cooperative bank that controls Megabanco.

Colombian telephone operators Empresa de Telecomunicaciones de Bogotá (ETB) and Empresas Públicas de Medellín (EPM), are offering control of local mobile phone operator OLA of which they are majority shareholders. Despite previous assurances that they were looking for a strategic investor to capitalize OLA, the memorandum of understanding makes it clear that control of the company is on the table. Last Friday, both companies pulled out of the bidding process for fixed-line local operator Colombia Telecom saying they were unable to compete with foreign bidders such as Mexico’s Telmex or Spain’s Telefónica.

As Colombian stocks rose on the results of its Congressional elections, stocks in Peru tumbled on news that nationalist Ollanta Humala has closed the gap on front-runner and conservative candidate Lourdes Flores in Peru’s presidential race. A recently published poll puts Humala neck and neck with Flores with 30% of the votes versus 31%, respectively. Humala has said that if voted into office he will impose tighter restrictions on foreign investment in Peru.