Colombia’s government said Wednesday it aims to further reduce its holdings in Colombia Telecomunicaciones, or Telecom, which is 51% controlled by Spain’s Telefonica SA and is Colombia’s biggest fixed-line telephone company.
Finance Minister Juan Carlos Echeverry said a proposal has been sent to Colombia’s Congress that could allow for a merger between Telecom and mobile phone operator Movistar, a unit of Telefonica.
Echeverry said the government’s proposal is partly in response to a “financial weakening of the company during recent years” that could create an “enormous risk” in terms of the company’s ability to meet pension payments and other obligations. Telecom, which used to be state-run, is now 49% controlled by the government.
He said the need for a merger with a mobile telephone company such as Movistar is necessary because fixed-line telephones in Colombia are quickly disappearing. Mobile telephones in Colombia rose to 45 million last year from 22 million in 2005, while fixed-line phones dropped to 6.4 million last year from 7.4 million in 2005, he said.