The Government confirmed today that it was launching a new Government owned Telecommunications Company financed by CVG and Edelca. The company will offer residential local, national and international telephone service as well as Internet services.
This is great news for CANTV. In the days prior to the recall vote the Government accused CANTV of conspiring against the recall vote and that it will nationalize it if necessary. Vice-President Rangel even said that the privatization of the company should be reversed, because this was a strategic sector for the Government. With the start of this company, the Government will have no more reason to use this argument and CANTV should be safe for the time being.
Moreover, CANTV’s business should also be safe. CANTV is a fairly efficient company at this time, with mobile and Internet being the growth drivers. We doubt the Government will devote the resources required to provide adequate Internet service, while residential service is regulated and not the best business in the sector. Curiously, the company will not go into the wireless business, the growth engine of CANTV. Talk about a dumb business plan! If on top of that the new telephone company is run as inefficiently as the Government, we suspect the new company will only survive in an environment of high oil prices, if at all.
This is truly a misguided idea, the Government should use resources to provide basic necessities and services to people, and this is not one of them anymore. When CANTV was partially privatized in 1990, it would take three or four times to even get a dial tone, public phones did not work, it would take up to five years to get a line and the company was a great source of corruption. What could be done differently this time given the badly managed Government we have? How much does the Government have to invest even to begin competing with CANTV and the other private telcos? Where will they get the talent to run it? What possible competitive advantage will they have?
To top it all off, the telecom sector has been opened to competition since 2001 and curiously the one that ahs attracted the least attention ahs been residential service, while there are some struggling companies competing in data and long distance. There are five cellp hone providers. This is about a silly an idea as I have heard from this Government. It will become another wasteful sink for funds and a new source of corruption, I am sure many are already lobbying to be named as Presidents of this company or to its Board of Directors.
The Devil's Excrement 
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