Bolivia Swipes Italian Operation

7:30 AM -- Telecom Italia (TIM) woke up Friday morning to find it had lost one of its international business units, Bolivian operator Entel S.A. (Empresa Nacional de Telecomunicaciones), to a revolutionary Latin American leader.

Bolivia's President, Evo Morales, spent Thursday issuing multi-sector decrees that included the nationalization of telecom and energy companies, including Entel, in which Telecom Italia holds a commanding 50 percent stake.

Morales announced his intention to bring Entel and a number of oil and mining companies back under state ownership in March 2007; since then the Italian incumbent, which has stressed its intentions to "safeguard its investments" in Bolivia, has engaged in unsuccessful negotiations with the Bolivian government about Entel's future.

Bolivia claims Entel needs to be owned by state hands because basic services, such as water, power, and communications, should not be in the hands of private companies. In addition, Bolivia has made "accusations of irregularities in the administration and management of Entel," according to the Italians.

Telecom Italia has denied this, of course, and in return has accused Bolivia's Ministerial Commission of having "adopted an ever more aggressive and intimidating stance" during those negotiations, and noted that the "Bolivian government's intention to re-appropriate Entel [is] in violation of all the fundamental norms of a state based on the law."

In its 2007 annual report, Telecom Italia noted that Entel, which has about 1.8 million mobile and 80,000 fixed-line customers and 1,500 employees, was to be the subject of an international arbitration hearing to decide on the operator's fate –- but Morales couldn't wait.

Telecom Italia doesn't know exactly what has happened or how to respond: "We're still trying to figure out what's going on," said one TI spokesman.

Check out this Bloomberg report to get a broad perspective on what Morales is up to.

— Ray Le Maistre, International News Editor, Light Reading

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