TI seeks arbitration over Entel

24 Oct 2007

Telecom Italia (TI) is seeking international arbitration to block the state takeover of its Bolivian subsidiary Entel. President Evo Morales issued a decree in April ordering TI to sell part or all of its 50% stake in Entel to the Bolivian state. Initially the Italian company agreed to talk with the Bolivian government but talks collapsed when the latter refused the company’s request to move the negotiations to another country. Telecom Italia has now apparently initiated a case before the World Bank’s International Centre for Settlement of Investment Disputes (ICSID), which facilitates conciliation and arbitration in disputes between governments and private foreign investors.

According to TeleGeography’s GlobalComms, Entel was created as monopoly domestic and international long-distance (DLD and ILD) service provider under the Ministry of Communications in 1965. It was part-privatised in 1995 when a 50% stake was sold to Telecom Italia holding vehicle STET International (later transferred to Euro Telecom International) for USD610 million. Entel retained a monopoly on DLD and ILD communications, as well as on local services in regions not covered by co-operative organisations, until November 2001.