NEW YORK-Compania Anonima Nacional Telefonos de Venezuela, the country’s monopoly telecommun-ications conglomerate, was scheduled to become a publicly traded company Nov. 22 with an offering outside the country of 34.2 million American Depository Shares.
The IPO, lead managed by Lehman Brothers, New York, was expected to include 13.5 million ADS sold in the United States and Canada. The securities are to be listed on the New York Stock Exchange in the United States.
The anticipated price range per ADS was $21.50 to $24.50. Each ADS represents seven Class D shares of common stock in CANTV. Besides the global offering, another 50 million Class D shares were planned for simultaneous sale in Venezuela, where they will trade on the Caracas Stock Exchange.
Five years ago, VenWorld Telecom C.A., a company incorporated in Venezuela, acquired operating control of Caracas-based CANTV and 40 percent of its equity share capital from the Venezuelan Investment Fund, a federal institution, for just under $1.9 billion.
A subsidiary of GTE Corp. owns a 51 percent stake in VenWorld. Other members of VenWorld include T.I. Telefonica Internacional de Espana S.A., AT&T Corp. and La Electricidad de Caracas S.A.C.A./S.A.I.C.A., a large private sector electric utility, according to Securities and Exchange Commission disclosure documents.
GTE said it had placed an order with the IPO underwriters for up to $200 million of the ADS sold by CANTV. “We are seeing an improvement both in the country and the company, and believe GTE’s further investment makes good sense for our shareholders and reinforces our commitment to Venezuela,” said Charles R. Lee, GTE chairman and chief executive officer.
Once the deal closes, the Venezuelan government will have reduced its stake in CANTV to 20.1 percent from 49 percent, and public stockholders will own 29.1 percent of the company’s equity share capital.
In 1992, a year after VenWorld acquired control, CANTV purchased the B-band cellular concession from the Venezuelan government for about $82 million. Through Movilnet, a wholly owned subsidiary, CANTV provides cellular telephone services to an area covering just more than half of Venezuela’s population. As of June 30, Movilnet had 178,000 customers, representing a 43 percent market share, according to CANTV. In the 30 months between Jan. 1, 1993, and June 30, 1996, the number of Movilnet’s cellular telephone subscribers increased by more than 82 percent.
By the end of 1995, 1.49 out of every 100 Venezuelan residents had cellular telephone service. This is a higher penetration rate than in other South American countries, like Argentina, Chile, Colombia, Mexico and Peru. But it also is significantly lower than cellular telephony penetration rates of 22.9 per 100 in Sweden and 12.8 per 100 in the United States.
Thus, CANTV views cellular services, which represented 10.5 percent of its revenues during the first half of this year, as a key growth area.
Movilnet uses L.M. Ericsson switching equipment and radio base stations. By year-end, Time Division Multiple Access infrastructure is expected to be installed in the Caracas metropolitan area. The digital rollout in other parts of its Venezuela coverage area is set to be completed by year-end 1998.
