"Telmex is the applicant that has the most advanced proposal, but Telefonica is actively working with Telecom (Colombia Telecomunicaciones) to introduce a bid," Marta Pinto de Hart said.

The government will publish details of the Telmex proposal this Friday. Other potential bidders will then have twenty days to present a better offer, De Hart said. The government will select the winner based on telecommunications expertise, but the international partner will also have to take on the operator’s expensive pension liabilities. Telecomunicaciones has pending payments of some 5.9 trillion pesos (US$ 1 = COP 2,306) to more than 16,000 retirees.

State-run telecom operators Empresa de Telecomunicaciones de Bogota (ETB) and Empresas Publicas de Medellin (EPM) have also expressed interest in creating an alliance with Colombia Telecomunicaciones. EPM and ETB also say they have joined forces to attempt to attract Telefonica Moviles as a strategic international partner in their telephone business. These latest developments come just one day after Colombia’s government reached a preliminary agreement with Telmex to help Telecomunicaciones get into the mobile market.

Alfonso Gomez, president of Colombia Telecomunicaciones said the international partner would take operational control of the company. Telecomunicaciones would not sell shares, rather the foreign partner would manage the company for a fee.

Colombia Telecomunicaciones was created in 2003 when the government liquidated its debt-ridden Telecom company. At the time, it cut permanent employees to 2,000 from 10,500.

In Colombia, America Movil also owns the largest mobile operator, Comunicacion Celular (Comcel) which had 9.17 million subscribers at the end of June. Telefonica Moviles also operates in Colombia through its subsidiary Movistar, the country’s second-largest mobile operator. It had 4.75 million subscribers at the end of June.

Source: Dow Jones - WDR/Intelecon Regulatory News