Mexican heavyweights give up on Venezuela

9 Feb 2007

América Móvil (AM) and its sister company Teléfonos de México (Telmex) have agreed to scrap their joint plan to buy a USD677 million, 28.5% stake in Venezuelan fixed line operator CANTV from US-based Verizon Communications. The contract will be cancelled within days, AM’s CEO Daniel Hajj said yesterday. The Mexican company added in an e-mailed statement that Verizon had agreed to end the deal. The news leaves Verizon on its own to negotiate with Venezuela’s government over its assets after President Hugo Chávez last month declared his intention to nationalise CANTV. Chávez has implied that he will not pay market price for Verizon’s stake, and may deduct the value of pensions owed to former workers. In April 2006 AM agreed to buy Verizon’s telecoms interests in Venezuela, the Dominican Republic and Puerto Rico for a total of USD3.7 billion. It completed the acquisition of Verizon’s 100% stake in Verizon Dominicana for USD2.062 billion and is waiting for clearance from the US regulator the FCC to purchase a 52% interest in Telecomunicaciones de Puerto Rico (PRT) for USD939 million, expected by the end of March. AM has agreed with Verizon to extend an offer to all other PRT shareholders to purchase their shares at the same price per share paid to Verizon.