When Hugo Chavez nationalized phone company CANTV, not only did he rob the shareholders (He paid less than Carlos Slim was offering per share), but now he is ready to rip us all of, by driving a good company into the sort of useless company that most state enterprises have become. The difference is that CANTV has competition, which Chavez will try to solve the easy way out: By nationalizing the competition…
The problem begins with the fact that while the Government only generates 8% of CANTV’s business, Government entities only pay 9% of what they use. (They consumed Bs. 550 million (US$ 127 million at the official rate of exchange) but paid barely Bs. 50 million (US$ 11.7 million)) You see, the Government assigns each Minsitry or company a budget for services, but since nobody is watching (even less now that blind Russian is in Cuba getting his health back) they could care less, they use more and simply don’t pay.
It’s called the irresponsible revolution…
If this were not enough, CANTV is making more money, but remember two curses: One, inflation, and the second one, is that the company invests less and less as the main shareholder (The Venezuelan people…no, sorry, Hugo Chavez) demands larger dividends. Thus, even though, earnings went from Bs. 734 million to Bs. 2.4 billion, this year the Government demanded Bs. 1.5 billion on dividends.
Thus, the company has 65% more fixed lines, 70% more cell phones and 1.5 million Internet users, but the investment budget was fulfilled on;y 55%, less than US$ 500 million. Meanwhile, Chavez forced the company to buy computers for the poor.
Of course, CANTV stays competitive by insuring that the foreign exchange control office CADIVI does not approve official dollars for competitors Movistar and Digitel, while approving them for CANTV. But one day this rope will break, as margins collapse (they already are), profits go down (They already have) and the company stops investing. At this point, mighty Hugo will come out and announce that telecom is “strategic” (i.e. He needs it to be reelected in 2018), the Spanish and Venezuelan owners will never get paid for their assets (What else is new?) and then Hugo “The Terminator” will destroy all of the telecom infrastructure, insuring that Venezuela will be a backwards country as long as he is in charge.
Yeap! It’s called a “revolution”, massive destruction of value and goodwill just because one man cares little about his country and his people, only about himself…
The Devil's Excrement 