TI reaches compensation deal over Entel renationalisation

9 Nov 2010

The long-running saga regarding the disputed renationalisation of Bolivian fixed line incumbent Empresa Nacional de Telecomunicaciones (Entel) appears to have finally reached an end. According to Reuters, Telecom Italia (TI) has accepted compensation totalling USD100 million relating to the enforced divestment of its stake in Entel, with the agreement between TI subsidiary Euro Telecom International (ETI) and the Bolivian government effectively settling all legal action between the two sides. As noted in TeleGeography’s GlobalComms Database, the dispute arose after a presidential decree was issued in April 2007 setting a 30-day deadline for the Italian firm to negotiate Entel’s return to state hands. A month later the government stepped up the pressure on TI to divest its interest, claiming that Entel owed the state USD53.4 million in unpaid taxes, and approximately USD7 million in fines. Following a stalemate lasting several months, President Morales issued a Supreme Decree in May 2008 ordering the renationalisation of the operator and under the terms of the renationalisation TI was offered USD100 million for its stake, a figure which the Italians claimed was well below the market value of the telco. On the back of the agreement it is understood that TI and Entel will continue commercial relations, while the former said that it expects the compensation to have a positive effect on its group profit.