Even CANTV is slowly being destroyed by Chavez’ revolution

May 12, 2011

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…

18 Responses to “Even CANTV is slowly being destroyed by Chavez’ revolution”

  1. Grant Fuhr Says:

    I should clarify. A “typical Venezuelan failure” is any normal business run here that half-works with lazy, worthless, incompetent staff who fall asleep on the job, show up late and/or hung-over, treat customers like shit, etc.

    Comparing CANTV to the rest of Venezuelan businesses puts them pretty far ahead in your own little Special Olympics marathon.

  2. Grant Fuhr Says:

    CANTV is a failure, like most Venezuelan companies. It became worse immediately after the nationalization, but is now starting to stabilize into a typical Venezuelan failure… or are you going to tell me that Movistar is an example to follow?

  3. Escualidus Arrechus Says:

    Hugo Chavez: Who wants to allow the escualidos to vote? I don’t.

  4. Kepler Says:

    Let’s make a poll.
    Who wants to read Pygmalion?
    I don’t.

  5. Pygmalion Says:

    George – who rattled your cage? Your comment has nothing to do with the post or even my comment. Am I not allowed to refute Miguel’s position of not being “precisely optimistic”? I wrote about my experince with phone systems and internet in Venezuela. I am not obliged to comment on the granting of preferential dollars to phone companies which is apparently an open and shut case.

    It is people like you wasting time with such inane comments that indirectly help the rehime instead of using your energy and time to work towards a democratic solution in 2012. Shame on you!

  6. GeorgeS Says:

    Pygmallion never reads posts, he just comes over to provoke, like the MCM comment, she is as much as an anti-Pygmallion as can be.

  7. Roberto N Says:

    Pygmalion, I think you missed this that was in MO’s post.

    “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. ”

    A relative that works at Movistar has told me that they have about 4 billion$ in Bolivars that they cannot find a way to repatriate or even use to order needed equipment and services.

    So stop wondering why, already

  8. Deanna Says:

    Pygmalion, Optimism is always good and that’s probably why I haven’t sold my house in Venezuela and abandoned the country completely. I still have strong ties with my Venezuelan family who are there and I intend to keep going there at least once a year to continue family ties!!! And someday, I can actually retire completely and live there until the end of my days (of course without Chavez or the Chavistas).

  9. Pygmalion Says:

    We changed from CANTV phone and broadband to Inter. What a mistake. The costs are about the same but Inter’s service leavs a great deal to be desired. I would have thought that the private sector would have been more effocient but, sadly, I was wrong. Now we are thinking of installing a CANTV line, ditching Inter and going back to DirecTV.

    Traveling Engineer – thanks for your comment which looks very interesting but it was written for engineers and not for “non engineers” like myself.

    I do not understand why Miguel is not optimistic about the 2012 presidential elections. After all, the opposition got 52% of the votes in the AN elections and Capriles radonsky is very popular and the country is going to the dogs – no food, no electricity, no water, huge inflation, unemployment, soaring homicides. Based of this it is impossible for Chavez to win. That is why I must disagree with Miguel. I am very optimistic.

  10. moctavio Says:

    Yes, the Government uses SMS messages to communicate, everyone registered in all three carriers received the invitation to register in Mision Vivienda. (I posted the message). It is effective, as almost anyone has a cell phone in Venezuela.

  11. Kepler Says:

    Liz was telling me she gets messages from the government every so often: about the housing thing, about voting. Can someone tell me how it is with them?
    She sent me some pictures of the messages.
    As Gringo said: things will keep functioning just enough so that they can spy on people. There is an interesting video from an Austrian specialist on communications talking about the Iranians and how they used Siemens-Nokia technology to clamp down dissidents. A friend of mine from SIemens told me now the Venezuelans are using mostly Chinese technology for that (pattern detection from dissidents etc)

  12. Traveling Engineer Says:

    I worked with Movilnet (CANTV’s mobile arm) for almost a year in 2010. The inertia and lack of direction there is amazing, and pretty much all the young engineers were learning a foreign language in their spare time, organizing visas and second nationalities, and leaving Venezuela asap. No future there…

    Imagine, CDMA and EVDO are dead in the water everywhere else, but Movilnet had no plans to shut their network down and move users to 3G and HSDPA. Even though the CDMA network cannibalizes desperately needed spectrum.

    Even with the money to invest, they had no idea how to roll out a 3G network, sites in the centre of Caracas could be maxed out with as little as 4 users… probably even now. Meanwhile companies like Movistar and Digitel, who would actually know what to do with the money can’t get any.

  13. An Interested Observer Says:

    There’s a saying in the U.S. about government procurement that seems quite apropos here: “When you go with the lowest bidder, sometimes you get what you pay for.”

  14. HalfEmpty Says:

    CANTV stays competitive by insuring that the foreign exchange control office CADIVI does not approve official dollars for competitors

    I see, that answers my how did they do it question.

    Meanwhile, Chavez forced the company to buy computers for the poor.

    Nothing wrong with that tho, it’s like free kittens for the thirsty.

  15. loroferoz Says:

    “Economic Calculation in the Socialist Commonwealth.”

    If you want a picture of it, you must resurrect M.C. Escher, and team him up with Dali. For Economic Calculation in the Chavista Commonwealth, I recommend Marcel Duchamp.

  16. moctavio Says:

    I am not precisely optimistic….

  17. Glenn Says:

    Re-elected in 2018? Does this mean 2012 election is a foregone conclusion in your view? Or was that just a slip of the tongue?

  18. Gringo Says:

    Thugo will not permit a total collapse of the telecom infrastructure, as the DGI helpers need to have viable monitoring available. At a minimum, they will remain viable.

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