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The Colombian government plans to further reduce its stake in fixed-line operator Colombia Telecomunicaciones (Telefonica-Telecom), which is 52 percent controlled by Telefonica. A proposal has been sent to Colombia's congress that could allow for a merger between Telecom and Telefonica's mobile unit Movistar, Dow Jones reports, citing Colombian finance minister Juan Carlos Echeverry. According to Echeverry, the government's proposal is partly in response to a "financial weakening of the company during recent years" that could create an "enormous risk" in terms of the company's ability to meet pension payments and other obligations. Telecom is now 48 percent controlled by the government. The need for a merger with a mobile telephone company such as Movistar is necessary because fixed-line telephones in Colombia are quickly disappearing, the minister added. The number of mobile phone lines in Colombia increased to 45 million in 2010 from 22 million in 2005, while fixed-line phones dropped to 6.4 million in 2010 from 7.4 million in 2005, the minister said. "The national government as well as Telefonica will inject capital in proportion to their stakes, with an eye to a merger later," Echeverry said without disclosing how much money the parties will invest. Following the merger, the resulting company is expected to provide quadruple-play services, including fixed and mobile telephony services, fixed and mobile internet connection, as well as pa-TV services.



This article was first published by Telecompaper.