The Colombian government has announced a new investment in fixed-line operator Colombia Telecomunicaciones (Coltel), with a view towards merging it with Telefonica’s local mobile unit, Movistar.
Telefonica holds a 52% stake in Coltel, while the…
The Colombian government has announced a new investment in fixed-line operator Colombia Telecomunicaciones (Coltel), with a view towards merging it with Telefonica’s local mobile unit, Movistar.
Telefonica holds a 52% stake in Coltel, while the government holds a 48% stake.
On Tuesday, the government put forward a plan to the Colombian Congress to inject capital into Coltel. The amount of investment was not made specific in the government’s statement, but they did say that it would be made in proportion to their stake in the company.
The plan put forward by the government, which still needs to be approved by Congress, also authorised it to merge Coltel with other entities in the IT/Communications sector. No specific name was mentioned.
The government said that the merger plan was aimed at obtaining benefits from the integration of fixed and mobile telecoms businesses. It was also aimed at guaranteeing service provision in an efficient way, which would allow the capture of synergies in favour of shareholders and giving the company greater strength in the market.
In the subsequent press conference after the announcement, it was revealed that the primary candidate for this merger was Movistar.
The head of operations at Telefonica Colombia, Alfonso Gomez, said: “The strengthening of Colombia Telecomunicaciones is key, as it is the delivery of innovative and integrated services for all our Colombian customers.”
An analyst at Sanford C. Bernstein, Robin Bienenstock, said: “An injection of capital into the TEF/govt owned wireline business would likely result in some better infrastructure in Colombia and improve the competitive position against ETB and America Movil.”
Bienenstock added that a merger would mean that the two companies could probably extract some cost synergies and market integrated offers. But she also noted that as Colombia makes up approximately just 2.5% of Telefonica’s revenues, this would not represent a “material change” to the Telefonica group.
ETB is a Bogota-based telco in which the local municipal government holds a majority stake. America Movil’s local operations are mobile operator Comcel and Telmex Colombia, which provides fixed-line telecoms, internet and TV services.
