On December 6 2001 the National Council of Economic and Social Policy issued Document 3,145, which sets out guidelines for the future policies and activities of the National Telecommunications Company (Telecom), taking into account its current financial and economic situation. The document is designed to establish a restructuring plan for the entity. Telecom is an industrial and commercial state-owned company mainly dedicated to the rendering of local, national and international fixed telephone services.

The council guidelines are designed to maintain a high quality of telecommunication services, as well as to avoid a further fall in Telecom's revenues, taking into account the new telecommunication technologies and techniques that are being used and developed worldwide. Further, the council has noted that Telecom's current financial situation has been influenced by two factors, which have had a significant impact on its financial and economic performance as well as on the quality of its services. These factors are (i) the considerable pension and labour liabilities, which Telecom predicts that it will be unable to meet in the future; and (ii) the payment of compensation by Telecom under the joint venture agreements for local joint ventures, which it also predicts that it will be unable to meet.

Consequently, as part of the restructuring plan the Colombian government has expressed its willingness to lend money from the Treasury to Telecoms so that it can pay its debts, provided that Telecom meets the conditions imposed by the National Council of Economic and Social Policy. Among other things Telecom must:

  • duly perform and terminate the joint venture agreements;

  • restructure itself; and

  • modify its collective bargaining agreements.

Additionally, the government will evaluate the possibility of giving guarantees for up to $600 million to guarantee future external debts, depending on:

  • the availability of funds at the National Treasury;

  • the possibility of Telecom giving appropriate counter-guarantees, which will be evaluated by the Ministry of Finance; and

  • Telecom's fulfilment of the conditions set down by the council.

The Colombian government may also ask Telecom and the companies in which it has participations to pledge shares.

If these instructions and conditions are met the Treasury Ministry, the National Planning Department and the competent surveillance entity will evaluate these results and issue instructions on the implementation of the new guidelines and support from the government.

For further information on this topic please contact Alejandro Linares Cantillo or Julian Santos Rubino at Gomez Pinzon & Asociados by telephone (+571 310 7055 or +571 310 5066) or by fax (+571 310 6646 or +571 310 6657) or by email ([email protected] or [email protected]). The Gomez Pinzon & Asociados website can be accessed at www.gomezpinzon.com.