After buying out Telecom Italia in a $706 million deal, the Cuban government is still looking for a foreign partner, an official said in Havana Monday.
“The process is not concluded,” said Jorge Luis Perdomo, deputy minister of communications, during a press conference for the opening of the Informática fair in Havana. “We’re still deciding whether Cuba should stay with the share, or whether we should sell it to a foreign operator,” he responded to a reporter question.
“There are many people in this,” Perdomo told reporters after the press conference, adding that the Cuban government had not made an official statement on the purchase of the 27-percent stake of state telecom ETECSA from Telecom Italia. “In any case, the policy of the country in this sense — with or without foreign participation — is to have sovereignty over communications and the possibility to manage them, due to the importance they have.”
Amid a cash crunch for the Cuban government, Telecom Italia announced Jan. 31 that Cuban state company Rafin S.A. had bought Telecom Italia’s 27-percent share in Cuban telecom ETECSA for a premium price of $706 million.
In its latest half-year report, Telecom Italia had valued its ETECSA stake at 367 million euro ($481 million), according to Italian newspaper Il Sole. However, TI reportedly asked $780 million for the stake in negotiations with Spain’s Telefónica in 2009.
Third-country companies including Spain’s Telefónica have expressed interest in buying Telecom Italia’s share. In March last year, Britain’s Cable & Wireless Communications plc said it wanted to bid for the stake, attracted by Cuba’s growth potential in the mobile phone sector. The London-based company is entering the Cuban market via an undersea cable linking Jamaica and Cuba. The cable landing, company CEO Tony Rice said, would position Cable & Wireless as a top contender to take over the ETECSA share.
“The starting point is the cable landing, but the greater prize is working with the [Cuban] government to develop its telecoms market,” Rice said, according to the Sunday Times. A Cable & Wireless spokesman later said that reports about an ETECSA stake purchase went “too far,” according to trade publication Total Telecom.
Cuba is not only the largest Caribbean market, but it is also the most underdeveloped for broadband and wireless communications in the western hemisphere.
According to the Telecom Italia press release, the Cuban entity already paid $500 million; Rafin will pay the remainder in 36 monthly installments of $5.72 million each. The arrangement is subject to “specific credit guarantees,” TI said, without explaining.
The government set up Rafin in 1997 as an entity to finance import-export operations, participate in debt refinancing operations, and manage centralized funds for state companies, among others. It is the non-bank financial branch of Grupo de Administración Empresarial S.A. (Gaesa), the armed forces’ business unit that controls entities that have remained solvent throughout the most recent cash crunch that began in 2008. This is likely Rafin’s largest-volume undertaking ever.
Six Cuban state entities currently own ETECSA — Telefónica Antillana S.A. (51.006%), Rafin S.A. (27.003%), Banco Financiero Internacional S.A. (6.157%), Universal Trade & Management Corporation S.A. (11.086%), Banco Internacional de Comercio S.A. (0.923%), and Negocios en Telecomunicaciones S.A. (3.825%).
