After Telefonica de Espana SA’s failure to acquire the Compania Telefonica de Chile, CTC, the Spanish telecommunications company has renewed its interest in Argentina’s telephone services operator Entel SA – confusingly, Telefonica has an Entel subsidiary back home in Spain – where it had put in a bid for 40% and was threatening to walk away from the whole deal after trades union wrangling at the end of last year. It now plans to offer $40m for 22% Entel, which is shortly to be privatised under the government’s programme to reduce public spending. At present, Entel’s biggest shareholder is the government with 30%, but the rest of the shares are spread out between large institutions, foreign pension funds and Argentinian institutions. Consequently, 22% of the shares would give Telefonica a considerable amount of control in the company. Entel, which will continue to run the country’s long distance phone service, will be floated on the stock exchange with the Argentine government trying to continue to control its destiny via prior agreements with the shareholding companies. Telefonica, promoting a strategy of operational involvement in public networking abroad is already in contact with the financial group who will put up 50% of the cash for the $40m flotation. Entel and Telefonica have collaborated in the past in 1981 Entel signed a deal with Telefonica’s subsidiary Sintel for equipment, technology transfer and personnel training. The sale of Entel will now, however, have to be approved by the new Argentine government, but if it comes off it will be a step in the right direction for the Spanish company. Telefonica’s other area of expansion, in application software and value added services, is still awaiting the outcome of the fusion between its subsidiary Sintel, Entel and the state holding company’s Eria. The 30% holding that was offered in the Chilean Telecommunications Company was awarded to Hong Kong-based interests of embattled Australian Alan Bond for $115m with an extra commitment to maintain $170m capital to further the company’s development (CI No 1,085).
