UPDATE: Colombia's ETB Shares Fall 27% As Sale Process Flops
September 02 2010 - 5:28PM
Dow Jones News
Shares of Colombian state-controlled telephone company Empresa
de Telecomunicaciones de Bogota SA (ETB.BO), or ETB, lost 27%
Thursday after the company halted the process to sell a controlling
stake as no bidders showed up.
ETB, which is controlled by Bogota's city council, was planning
to hold an auction on Sept. 15. Prequalified bidders had until
Wednesday to file offers and none did, ETB said in a filing to the
Colombian stock and bond regulator.
"The company will keep on working to add value for its
shareholders," ETB said in the filing. Shareholders weren't
impressed, however, as the share price fell 27% to end at 792
Colombian pesos (US46 cents), its lowest point since April
2009.
Andres Jimenez, a market analyst with local brokerage
Interbolsa, said the shares may drop to below COP700. The share
price had risen to a record COP1,280 in late 2009 on speculation
over the search for a partner up from around COP500 in late
2008.
ETB urgently needs investment to be able to compete with larger
and financially stronger Telefonica SA (TEF, TEF.MC) and Telefonos
de Mexico SA (TMX, TELMEX.MX), or Telmex. The competition has
brought all telecom fees down over the past few years and both
Telefonica and Telmex have won significant market shares in Bogota,
where ETB used to dominate.
The Bogota city council was planning to sell new voting shares
in the company to the new partner and change its own shares into
non-voting, which would have given the new partner the control of
the company.
ETB hadn't released the list of possible bidders though
Telefonica had asked Colombian anti-trust authorities whether a
merger would be possible and the answer was "yes."
Besides Telefonica, Telmex as well as Millicom International
Cellular SA (MICC) were mentioned as possible bidders.
Julian Cardenas, a market analyst with local brokerage
Corredores Asociados, said ETB has little choice other than looking
again for a partner offering better conditions as its traditional
business, local calls, isn't profitable enough anymore and the
company needs investment to be able to compete in other fields.
Samuel Moreno, the mayor of Bogota, told local radio Caracol,
that the outright sale of the company is out of the question,
although his administration will seek new alternatives. The city
council controls 86.59% of ETB, 11.60% trades on the stock market
and the remainder is in the hands of state institutions.
Fernando Carrizosa, the company's president, didn't return phone
calls seeking comments.
-By Inti Landauro, Dow Jones Newswires; 57-1-694 00 76;
colombia@dowjones.com