Government steps up pressure on Telecom Italia to quit Entel

11 Jun 2007

The Bolivian government has stepped up pressure on Telecom Italia to divest its interests in fixed line incumbent Entel, saying the company owes USD60 million in unpaid taxes and fines. According to a report by Reuters the Bolivian Tax Superintendency said that Entel, which is 50% owned by Telecom Italia and which the government wants to revert to state control, owes USD54.3 million in unpaid taxes. Earlier this year tax officials said Entel’s debt totalled USD28.3 million, but according to state news agency ABI, the Tax Office has imposed an additional fine of USD29 million on the company for failing to pay.

In April, President Evo Morales issued a decree ordering Telecom Italia to negotiate a sale of part or all its stake in Entel to the Bolivian state. Initially, the Italian company agreed to meet with the Bolivian government but called off the talks in late April, threatening to resort to international arbitration and vowing to ‘evaluate all initiatives aimed at safeguarding its investment in Entel Bolivia.’ The Italian company bought its half share in Entel in 1996, pledging to invest USD610 million in the company. However, the Morales’ administration claims the company has invested some USD144 million less than agreed. In response Entel has launched an advertising campaign, saying it has invested USD720 million to bring Bolivia’s telecommunications network in line with international standards, pioneering the introduction of Internet and mobile phones in the Andean country.