UPDATE: Colombian Telecom ETB Seeks Partner To Inject Money

Colombia's state-controlled Empresa de Telecomunicaciones de Bogota SA (ETB.BO), or ETB, is seeking a partner to inject fresh capital into the company in return for as much as a 49.9% stake in ETB, ETB's chief financial officer Mario Contreras said Friday.

"This process is open to all kinds of investors willing to invest money into the company under the condition that the city of Bogota will keep the majority stake in ETB," Contreras told Dow Jones Newswires in an interview.

The decision to seek an investor followed a recommendation of investment banking unit of Banco Santander SA (STD).

Santander will invite all kinds of investors such as equity funds, phone companies already operating in Colombia and other type of companies, Contreras added.

Contreras mentioned companies like Spain's Telefonica SA (TEF) and Mexico's Telefonos de Mexico SA (TMX) already operating in Colombia and others like Verizon Communications (VZ) which aren't yet present.

By June, ETB is expected to open its data room to allow possible candidates to study the company.

Meanwhile, Santander is expected to have the valuation of the company ready before the end of the first half of the year, he added.

Camilo Dauder, analyst at the Medellin-based brokerage Interbolsa, said ETB will find it difficult to lure a strategic investor willing to inject money when it will not obtain control.

"There are many unanswered questions in this process," Dauder said.

ETB has said it seeks options to finance its investment needs and expansion plans.

ETB, which is the main telecom firm of the capital city Bogota, faces rising competition from Telefonica and Mexico's Telefonos de Mexico.

ETB's revenues from fixed-lines and long distance calls are dwindling as the three firms are now offering fixed-lines, internet connection and cable TV bundled together, a service known as triple-play.

ETB is controlled by the Bogota city council, which holds a 88.5%, while minority shareholders have the remaining 11.5%.

Shares of ETB fell 0.15% to 671 Colombian pesos ($0.27), while the IGBC stock index rose 0.2%.

-By Diana Delgado, Dow Jones Newswires; 571-6107044 ext 1132; [e-mail]