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Venezuela sets up state telecom company |
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by FP/WSJ via Scott Edwards
Email: scottisimo (nospam) hotmail.com (verified) |
16 Sep 2004
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Venezuela sets up state telecom company
From Wall Street Journal, September 15, 2004
President Hugo Chavez created a state telecommunications company to challenge the domination of Venezuela's local market by foreign-controlled companies.
Some industry executives said the new company — CVG-Telecomunicaciones CA, which has links to the military — could receive tax breaks and other advantages, making it an unfair competitor in Venezuela's telecom sector, which has been in private-sector hands for 14 years.
"This state company could have fiscal and regulatory benefits that private firms would not have ... it will also be taking away market share," said Ricardo Baquero of Venezuela's Telecommunications Chamber.
The decree signed by President Chavez setting up the new state company, which will provide telephone and data services and has start-up capital of 9.6 billion bolivars ($5 million), was published yesterday in the government gazette.
Since he was first elected in 1998, the left-wing president has worked to increase the state's role in the economy. Critics say government meddling and currency controls are stifling private business and they accuse Mr. Chavez of trying to turn the world's No. 5 oil exporter into a replica of communist Cuba.
CVG-Telecom is 60%-controlled by Venezuelan state industrial holding company Corp. Venezolana de Guayana (CVG), which runs basic industries and hydroelectricity generation.
CVG President Col. Rafael Sanchez said the company planned to offer prices below those existing in the market, which is dominated by two private companies. CANTV, which is controlled by Verizon Communications Inc. of the U.S., leads the domestic fixed-line phone and Internet market. Telcel, which dominates the cellular market, was an affiliate of U.S.-based BellSouth Corp. until March, when Spain's Telefonica said it was purchasing the Venezuelan unit as part of a buy-up of BellSouth's Latin American operations.
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