Monday, January 22, 2007

Cursing “Chavi Boy” to Underpay for Venezuelan Telecom

Not since CSX sold its shipping line to the Carlyle Group will a company change hands at such a discount. Venezuelan President Hugo Chavez insisted he would pay less than the market price for CANTV, owned 28.5% by Verizon Corp. This puts in peril Verizon’s planned sale of its holdings in the company to a joint venture between American Movil and Telefonos de Mexico SA.

What’s more interesting is the major institutional holders of the companies involved. Fidelity Management & Research Corporation owns 55 million shares of Verizon and 65 million shares of American Movil. The just resigned Chairman of Fidelity recently took over the top spot at the Pentagon. Robert Gates resigned his chairmanship to accept the Defense Department Chief role. You better bet his phone lines are lit up with calls from his past associates concerned about the value of their investments.

Hugo’s rational for underpaying on the nationalization includes “debts to workers, pensions, and other obligations, including a technological debt to the state”. Verizon’s response was terse and understated.

Verizon spokesman Eric Rabe would not comment on what options his company believes it has in trying to affect the price in the CANTV takeover. "Given the decision the government has made, we support efforts to adopt a proper process and move ahead promptly," he said, declining to elaborate.

Might Eric pick up the phone and call the new Chairman of Fidelity? Might the new Chair be concerned as they also hold 62 million shares of AES Corp, the energy company facing nationalization of its Venezuelan electrical power generating plants? Just from Hugo’s recent action they stand to take a hit on almost $6 billion of their portfolio.

This doesn’t incude Hugo’s 4 letter word tirade on his radio and TV program. He said “Go the hell gringos! Go home!” There is nothing worse than a pickpocket cursing you afterwards. Time to call the world's police...

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